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Wells Fargo’s Home Lending Falls, Could Go Lower

Quarterly residential lending activity was slower at Wells Fargo & Co., and mortgage production in the current quarter could contract further.

Wells Fargo closed out the third-quarter with $55 billion in home loan originations.

As predicted in the second quarter analysis, third-quarter production fell short of the $62 billion in loans closed during the prior three-month period.

Still, recent volume was better than the $48 billion produced in the third-quarter last year.

From Jan. 1 to Sept. 30, Wells Fargo provided $166 billion in mortgages and HELs.

Refinance share fell to 34 percent from 46 percent in the second quarter.

The latest home loan production total included $32 billion in retail originations, $22 billion in correspondent acquisitions and $1 billion in home-equity loans and home-equity lines of credit.

First-mortgage loan applications dropped to $73 billion in the most-recent period to $81 billion in the second quarter.

In addition, new applications in the unclosed pipeline were scaled back to $34 billion as of Sept. 30 from $38 billion three months earlier.

As a result, the home loan provider might see reduced production volume in the fourth quarter.

At the end of September, the San-Francisco based lender reported a $1.669 trillion primary residential servicing portfolio.

The amount fell behind the $1.691 trillion listed as of June. 30 and the $1.772 trillion accounted for a year ago on Sept. 30.

This most-recent amount included $1.323 trillion in third-party servicing and $0.346 trillion in investment loans.

Wells Fargo also accounted for $0.004 trillion in sub-servicing activity at the end of last month.

As of Sept. 30 this year, owned residential assets amounted to $325.903 billion — more than $324.032 billion as of June 30 and $324.212 billion as of Sept. 30 last year.

This latest portion of the balance sheet included $271.311 billion in one-to-four-family first mortgages and $54.592 billion in junior liens.

Servicing of commercial mortgages grew to $591 billion from $585 billion three months earlier and $547 billion twelve months earlier.

The latest total accounted for $470 billion in loans serviced for others and $121 billion in owned loans.

Additionally, the lender sub-serviced $7 billion in commercial real estate loans.

CRE holdings increased to $142.962 billion over the June-end total of $141.004 billion and $130.154 billion as of Sept. 30 a year prior.

Originally, the balance sheet listed $125.088 billion in CRE loan assets for the previous year’s third quarter.

The recent CRE asset total included $121.252 billion in commercial mortgages and $21.710 billion in construction loans.

Quarterly mortgage banking business earnings dipped to $1.589 billion from $1.705 billion in the previous three-month time frame. Income also came up short of last year’s third-quarter amount of $1.633 billion.

Despite this business sector loss, Wells Fargo improved its company-wide earnings, prior to income tax expense, to $8.8 billion, or $0.2 billion over the second quarter. As well, recent earnings were $0.2 billion better than the third-quarter 2014 total.

At the holding company level, Wells Fargo counted 265,200 full-time equivalent employees, which was 600 fewer than the June-end total. Recent staffing numbers were higher than the 263,900 accounted for at the same point last year.

Wells Fargo’s branches numbered 8,700, unchanged from the prior quarter listing.

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