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| A surge in residential originations at Wells Fargo & Co. was driven by retail activity. An increase in new applications last month suggests business will only get better. Thousands of employees have been hired to handle the rising business.Wells reported today first-quarter originations of more than 450,000 loans for $101 billion, doubling from the fourth quarter’s $50 billion. A year ago, originations were $66 billion.
Originations were higher than any quarter since the third-quarter 2003 — when $161 billion in production was reported. First-quarter activity included $51 billion in retail production — more than double the $20 billion originated in the prior period. Correspondent and wholesale volume rose to $49 billion from $28 billion, and home-equity loan and line-of-credit fundings were unchanged at $1 billion. Wells said it processed $190 billion in mortgage applications during the latest period, including $83 billion during March, leaving its unclosed pipeline at $100 billion on March 31. Applications were $116 billion in the fourth quarter, when the pipeline ended the period at $71 billion. Refinances accounted for 82 percent of the most recent quarter’s applications, jumping from 68 percent in the fourth quarter. The share of refinance applications in the Mortgage Bankers Association’s weekly survey released today was 80 percent. The residential mortgage servicing portfolio reached $1.646 trillion, rising from $1.656 trillion on Dec. 31, 2008, and $1.390 trillion on March 31, 2008. The servicing portfolio included $1.379 in loan service for others at the end of last month, up from $1.388 trillion at the end of last year. “We now service one of every six mortgages in the U.S., up from one in eight last year,” Wells President and Chief Executive Officer John G. Stumpf said in the report. First-quarter loan workouts amounted to 158,000. Wells said it owned $242.9 billion in residential first mortgages as of March 31, lower than $247.9 billion three months earlier. Junior lien holdings fell to $109.7 billion from $110.2 billion. Higher risk portfolios — including broker-originated home-equity loans and pick-a-payment mortgages — were reduced by $4.5 billion. The servicing portfolio of commercial mortgages serviced for others ended the first quarter at $0.474 trillion, higher than $0.472 trillion at the end of the fourth quarter. A year earlier, prior to the Wachovia acquisition, the portfolio stood at just $0.144 trillion. Commercial mortgage holdings ended last month at $138.8 billion, up from $137.8 billion. There were $391 million in net chargeoffs on the 1-4 family first mortgage portfolio and $847 million in net chargeoffs on the junior lien portfolio in the first quarter. The activity was attributed solely to declining home values. Junior lien performance is expected to deteriorate as first-mortgage modifications accelerate. Non-interest income at the mortgage-banking unit came in at $2.5 billion, improving from a $0.2 billion loss in the fourth quarter and an $0.6 billion profit in the first-quarter 2008. Net income at Wells Fargo & Co. was $3.0 billion during the first quarter, reversing a $2.7 billion fourth-quarter loss and higher than $2.0 billion a year earlier. Wells said it paid out $372 million in preferred dividends to the U.S. government for advances under the capital purchase program. Retail home mortgage consultants from Wachovia have transitioned to Wells’ systems and have been assigned to partner with each Wachovia store. Wells said it hired more than 5,000 “operations team members” to process increased mortgage volume. |
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