Wells Reports Falling Originations, Rising Delinquency & Record Earnings

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MORTGAGE EXPERT
7 · 19 · 11

Home-loan fundings took a hit at Wells Fargo & Co., though new applications suggest a bump in activity might be ahead. Delinquency was higher and the servicing portfolio was lower. But earnings reached an all-time high.

Production at Wells Fargo Home Mortgage was $64 billion in the second quarter based on earnings data announced Tuesday. Business tumbled from the first quarter’s $84 billion. It was also down from $81 billion in the second-quarter 2010.

The latest period included $34 billion in retail originations and $29 billion in correspondent-wholesale volume.

But it looks like originations might rise based on loan applications, which climbed to $109 million in the latest period from the prior quarter’s $102 billion. The application pipeline finished last month at $51 billion, 13 percent higher than at the end of March.

The Des Moines, Iowa-based lender’s managed residential servicing portfolio ended the second quarter at $1.810 trillion compared to $1.808 trillion three months earlier and $1.812 trillion a year earlier. The third-party portion of the portfolio was $1.464 billion as of June 30.

Residential first mortgages on the balance sheet declined to $222.9 billion from the first quarter’s $226.5 billion. The total was $233.8 billion on June 30, 2010.

Junior lien holdings closed out the quarter at $89.9 billion, also lower than the prior period when the balance was $93.0 billion and 12 months prior when the total was $101.3 billion.

Delinquency including foreclosures was 7.44 percent — rising from 7.22 percent in the first-three months of 2011.

The commercial mortgage servicing portfolio fell to $517 billion from $521 billion and was $551 billion a year earlier. Last month’s portfolio included $402 billion in mortgages serviced for others.

Commercial real estate outstandings eased to $122.8 billion from $124.0 billion at the close of the first quarter. The June 30 figure reflected $101.5 billion in mortgages and $21.4 billion in construction loans.

Wells Fargo noted that outstanding repurchase demands fell to $2.24 billion from $2.49 billion on March 31. The company took $442 million in second-quarter repurchase charges.

The report indicated that a proposed $125 million settlement with mortgage-backed securities investors has already been included in reserves and “should resolve pending securities law claims for most purchasers of our private label mortgage-backed securities.”

Another $428 million in operating losses was recorded for foreclosure-related matters.

Wells Fargo & Co. earned a record $3.95 billion between April 1 and June 30. By comparison, first-quarter earnings were $3.76 billion, and the company earned $3.06 billion a year earlier.

Company-wide staffing ended June at 266,600, lower than 270,200 at the end of March.

Mortgage Expert

Mortgage Daily Staff

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