Mortgage Daily Logo
mortgage news from industry experts

Wells CFO Sees Declining Originations Continuing

New mortgage business has started to decline at Wells Fargo & Co., and the company’s chief financial officer projects that the decline will continue. But the company is committed to home lending and still sees much opportunity.

The San Francisco-based lender previously reported that it originated $524 billion in residential loans during all of last year.

At the same time, its mortgage servicing portfolio finished last year at $1.873 trillion.

“We’re the largest residential mortgage originator and servicer,” Wells Fargo Chief Financial Officer Tim Sloan said Wednesday during a presentation at the Credit Suisse Financial Services Forum. “And this is a result of our long-term focus on providing our customers with great products and services and remaining committed to the mortgage businesses when others exited.”

But fourth-quarter mortgage production fell to $125 billion from the prior quarter’s $139 billion, and the outlook is for continued decline.

“I think it’s likely gonna continue because of the pace at which refinancing activity is declining in the entire industry is a little bit faster than the new purchase money activity, though that’s picking up which is good,” Sloan said.

But he noted that Wells Fargo has been through many mortgage cycles, and they have been discussing the anticipated decline for six to nine months.

Sloan explained that it is mathematically impossible to continue in the current refinance environment.

“We expect originations to continue to decline. We expect gain-on-sale margins to decline,” he said.

But he noted that a review of the company’s servicing portfolio in the fourth quarter indicated that there are hundreds of billions of dollars in opportunity in the existing portfolio. Plus, rates are still low enough to continue generating more refinances.

Sloan said that if originations decline on a sustained basis, it takes between 30 and 90 days to adjust costs to the decline.

“I’m not being negative about the business,” he added. “It’s a great business. We love the business.”

He sees much opportunity just from cross-selling.

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts

THE TRUSTED PROVIDER OF ACCURATE RATES AND FINANCIAL INFORMATION