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Wells Fargo Mtg Originations Flat, Delinquency Up

Residential loan production moved minimally higher at Wells Fargo & Co. But performance deteriorated on mortgages in both its servicing portfolio and investment portfolio.

In the three months ended Sept. 30, home loan originations were $48 billion, third-quarter earnings data released Tuesday revealed.

Business crept up $1 billion from the second quarter but plunged from the $80 billion in mortgage production generated during the third-quarter 2013.

During the first nine months of 2014, volume amounted to $131 billion.

Although retail originations rose 8 percent from the second quarter to $27 billion, correspondent activity dropped 5 percent to $20 billion in the third quarter.

New loan applications fell to $64 billion from $72 billion in the second quarter, suggesting that the San Francisco-based company will see a drop in fourth-quarter originations. The pipeline fell to $25 billion from $30 billion.

Refinance share climbed to 30 percent in the third-quarter 2014 from 26 percent three months earlier.

The managed servicing portfolio closed out the third quarter at $1.772 trillion, down from $1.792 trillion in the previous quarter and $1.838 billion in the year-earlier quarter.

The latest servicing portfolio included $1.430 trillion in loans serviced for others.

Wells Fargo reported another $0.005 trillion in subservicing.

The rate of delinquency, including foreclosures, on the total servicing portfolio jumped 16 basis points from the second quarter to 5.80 percent. Delinquency, however, declined 53 BPS from Sept. 30, 2013.

Total residential assets were $324.170 billion as of the end of the latest period. Wells bolstered its balance sheet from the end of the second quarter, when the total was $322.559 billion, and from the third-quarter 2013, when it owned $322.599 billion in residential loans.

The Sept. 30, 2014, total included $263.326 billion in first mortgages and $60.844 billion in junior liens.

Delinquency of at least 60 days was 2.50 percent on the junior lien portfolio, worsening from 2.39 percent in the prior period.

Excluding $7 billion in subservicing, Wells Fargo serviced $547 billion in commercial real estate loans, more than the $538 billion serviced as of mid-year 2014. The CRE servicing portfolio was $522 billion as of Sept. 30, 2013. The most recent total included $440 billion in loans serviced for others.

CRE holdings came in at $125.088 billion, off slightly from $125.474 billion as of June 30 but up from $121.953 billion at the same point in 2013.

Last month’s CRE loans included $107.208 billion in mortgages and $17.880 billion in construction loans.

A 25 percent drop from the second quarter in outstanding repurchase demands left mortgage repurchase liability at $669 million as of Sept. 30.

Income from mortgage banking fell to $1.633 billion from $1.723 billion in the second quarter but improved from $1.608 billion one year prior.

At the bank-holding company level, income prior to taxes slipped to $8.597 billion from $8.655 billion but improved from $8.301 billion at the same point in 2013.

Wells Fargo employed 263,900 people as of the end of the third quarter, lifting its ranks from 263,500 as of June 30. But the financial services giant lowered headcount from 270,600 at the same point last year.

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