Home-loan production at Wells Fargo & Co. fell 10 percent from the third quarter, and application activity suggests that the current quarter will be even slower. The nation’s biggest mortgage lender continued to move some of its new originations onto its balance sheet instead of into the secondary market.
Residential loan originations during the final three months of 2012 totaled $125 billion, according to earnings data released Friday.
Fundings fell from the third quarter, when $139.0 billion in home loans were funded. But production picked up from the final period of 2011, when $120 billion in home loans were closed.
Refinances accounted for 72 percent of fourth-quarter originations, the same share as in the third quarter. Refinance share has deflated somewhat from 78 percent a year earlier.
Retail originations represented $63 billion of first-quarter activity, while correspondent-wholesale accounted for $61 billion.
Full-year 2012 originations totaled $524 billion, strengthening from the $357 billion in 2011 production.
First-quarter 2013 production is positioned to lose ground based on new applications, which declined to $152 billion from the third quarter’s $188 billion. The application pipeline retreated to $81 billion from $97 billion.
Wells Fargo said that it retained $9.7 billion in first-mortgage production on its balance sheet, foregoing around $340 million in fee revenue that would have been generated through normal agency sales. A similar strategy was used in the third quarter.
The managed residential mortgage servicing portfolio finished December at $1.873 trillion. The portfolio was $1.879 trillion as of Sept. 30 and $1.822 trillion at the end of 2011.
Included in the most recent total were $1.498 trillion in mortgages serviced for others, $0.368 trillion in owned loans serviced and $0.007 trillion in sub-servicing.
Residential first mortgages owned by Wells Fargo as of Dec. 31 totaled $249.900 billion. The portfolio expanded from $240.554 billion three months earlier and $228.894 billion a year earlier.
Junior lien holdings fell to $75.465 billion from $78.091 billion and have been reduced from $85.991 billion in the same period the previous year.
The home-equity portfolio — which is reflected in both the first- and junior-lien portfolios — declined to $90.427 billion from $92.979 billion as of Sept. 30. Sixty-day delinquency on the HEL assets was cut to 2.77 percent as of the end of 2012 from 2.90 percent at the end of the third quarter.
Wells Fargo said that it serviced $527 billion in commercial mortgages, more than the $523 billion portfolio at the end of September and $518 billion as of the same point in 2011. Last month’s total included $408 billion in commercial real estate loans serviced for investors, $106 billion in CRE loans owned by Wells Fargo and $13 billion in sub-servicing.
Commercial real estate loans on Wells Fargo’s balance sheet grew to $106.340 billion from $104.611 billion as of Sept. 30 and were also up from Dec. 31, 2011, when the total was $105.975 billion.
Real estate construction loan assets were trimmed to $16.904 billion from $17.710 billion and have been cut from $19.382 billion at the end of 2011.
A settlement was announced Monday by the Office of the Comptroller of the Currency with several major mortgage servicers that included $3.3 billion in cash payments and $5.2 billion in other assistance. Wells Fargo’s share of the cash portion is $0.8 billion, while it has committed an additional $1.2 billion for foreclosure prevention.
Repurchase provisions were reduced to $379 million from the third quarter’s $462 million. Total repurchase liability increased, however, to $2.2 billion from $2.0 billion.
The bank said that its 8,680 unresolved repurchase demands for $1.9 billion included demands on 6,621 government-sponsored enterprise loans for $1.5 billion; 1,306 private loans for $0.3 billion; and 753 mortgage insurance rescissions for $0.2 billion.
Mortgage banking income climbed to $3.1 billion from $2.8 billion in the third quarter. During the same period a year earlier, mortgage banking income was $2.4 billion. The fourth-quarter results reflected $0.3 billion in servicing income and $2.8 billion in net gains on origination and sales activities.
The San Francisco-based parent company earned a $7.2 billion before taxes, off from $7.5 billion earned in the third quarter but more than the $6.1 billion earned in the year-earlier period. After deducting for taxes and non-controlling interests, net income was a record $5.1 billion for the quarter and a record $18.9 billion for all of last year.
Company-wide headcount closed out 2012 at more than 269,200 employees, more than the 267,000 employed at the end of the prior quarter and 264,200 on board at the end of the prior year.
