Wells Fargo Home Mortgage Application Volume Soars

Despite the residential housing slowdown, Wells Fargo & Co.’s backlog of new home mortgage applications is up 19 percent this quarter, the firm’s CFO said Monday.
The increase reflects more mortgage refinancing of home loans because long-term interest rates continue to be historically low and because rates on long-term loans are lower than short-term rates.

CFO Howard Atkins also said that in the bank’s core markets, primarily in California, home purchase loan activity continues to generate “decent volume.”

The increase also may reflect slowly growing market share because mortgage brokers are directing more business to “strong providers” in the wake of a spate of bankruptcies from subprime mortgage originators.

Wells Fargo home mortgage volume is nevertheless fighting the same credit issues that continue to plague the home loan lending industry as a whole.

Its $28 billion home loan portfolio still has some problems due to once-low credit standards, and its home equity loan portfolio is showing “some deterioration” because of declining home values in much of the nation.

The bank at the end of last year bulked up its home loan infrastructure by hiring more collection managers, installing a new collection system and slowing new loans, particularly to higher-risk borrowers.

“Delinquencies have come down, as a result,” he said.

The company’s residential mortgage portfolio, despite this recent growth in home mortgage applications, also is being more tightly managed than 12 months ago.

It represents about 26 percent of Wells Fargo’s total assets, down from about 30 percent through 2006, due to tightened standards, smaller home loans and more regulations on would-be borrowers with weak credit histories.

SOURCE: MarketWatch