Quarterly Wells Fargo Mortgage Lending Off, Year Up

Mortgage News

Mortgage Daily Staff

                                                 January 15, 2016

In step with its early reporting peers, Wells Fargo & Co. slowed home-loan production on a quarter-over-quarter basis but had an annual gain.

From Oct. 1 to Dec. 31, Wells Fargo originated $47 billion in residential loans.

This total and other financial information was gathered from the San Francisco-based bank-holding company’s fourth-quarter earnings report.

Eight billion dollars short of the third-quarter total, the recent originations tally marks the second consecutive financial period that new mortgage activity has faded at Wells.

Recent lending volume, however, surpassed fourth-quarter 2014  originations by $3 billion.

Through all of 2015, Wells Fargo handed out $213 billion to consumers for mortgages and home-equity loans.

As has been the case with earnings reports from rival financial institutions, Wells Fargo increased its annual production from 2014, when it funded $175 billion.

Refinance share swelled to 41 percent from 34 percent in the third quarter.

Fourth-quarter home loan volume reflected $27 billion in retail originations, $19 billion in correspondent acquisitions and $1 billion in HELs and home-equity lines of credit.

First-mortgage applications shrank to $64 billion from $73 billion in the third quarter, while the application pipeline decreased $5 billion to $29 billion — suggesting originations may continue scaling back in the first quarter of this year.

At the end of December, Wells Fargo’s primary residential servicing portfolio was at $1.645 trillion, smaller than the $1.669 trillion at the end of September and the $1.747 trillion at the end of 2014.

The San-Francisco based firm’s portfolio total included $1.300 trillion in mortgages serviced for others and $0.345 trillion in investment loans.

In addition, the bank claimed $0.004 trillion in sub-servicing activity.

Owned residential assets on the balance sheet bumped up to $326.873 billion from $325.903 billion as of Sept. 30 and $325.103 billion as of Dec. 31, 2014.

The latest total included $273.869 billion in one-to-four-family first mortgages and $53.004 billion in junior liens.

At the end of last year, the lender serviced commercial mortgages at $600 billion, an increase from $591 billion as of Sept. 30 and $568 billion at the close of 2014.

The most-recent commercial mortgage servicing total included $478 billion in loans serviced for others and $122 billion in owned loans.

Wells Fargo also sub-serviced an additional $7 billion in commercial real estate loans.

The CRE investment portfolio grew to $144.324 billion versus the September-end total of $142.962 billion and $130.724 billion as of Dec. 31 a year prior.

The most-recent CRE holdings were comprised of $122.160 billion in commercial mortgages and $22.164 billion in real estate construction loans.

Despite some dips in key sectors, quarterly mortgage banking business earnings managed a marginal, $0.071 billion increase to $1.660 billion. As well, recent income was slightly above fourth-quarter 2014 earnings of 1.515 billion.

At the holding company level, Wells Fargo earned $8.4 billion prior to income tax expense. Earnings were $0.4 billion lower than in the third-quarter income but nearly equal to fourth-quarter 2014 income.

Across the firm, Wells Fargo counted 264,700 full-time equivalent employees or 500 fewer workers than inventoried at the third quarter’s endpoint.

Compared to the same point last year, recent headcount made a 200-person gain.

Extending to 8,700 locations, Wells Fargo’s physical footprint equaled its prior-quarter count.

Mortgage Daily Staff

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