Things that make you go Hmm..."Wells Fargo Cedes Bank Mortgage Crown to JPMorgan After Pullback"

Things that make you go Hmm...

"Wells Fargo & Co. ended its long reign as the largest mortgage lender among US banks, nine months after announcing plans to shrink the business.

JPMorgan Chase & Co., it biggest rival, now tops Wells Fargo in third-party servicing, origination volume and on-balance-sheet home loans, according to company filings. JPMorgan leapfrogged Wells Fargo in the latter two categories when it bought First Republic Bank in May, and the size of the two firms’ servicing portfolios crossed in the third quarter.

Wells Fargo sought the No. 1 rank for years after doubling down on the business when the 2008 financial ..."

https://news.bloomberglaw.com/banking-law/wells-fargo-cedes-bank-mortgage-crown-to-jpmorgan-after-pullback?context=search&index=4

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8 replies (most recent on top)

@@hls+1paj5Xhy. Can you explain why it’s a losing proposition? I was under the assumption higher rates meant more income. Am I wrong?

Yes you are wrong.

Most originations are conforming loans which are sold to Fannie or Freddie and the bank earns a gain on sale (non interest income). The interest rate is immaterial on these transactions. Because of the low amount of originations industry wide, that has led to much competition and margin compression on each transaction, I.e. less revenue.

Wells Fargo only earns interest income from higher rates on newly originated portfolio (jumbos) loans. Originations have absolutely collapsed due to unaffordability and high rates. The vast majority of the banks portfolio is loans at very low rates, which are big losers for the bank.

The current environment is horrendous for mortgage. With that being said, it still doesn’t justify shutting down the best mortgage business in the industry.

@ijk+1paj5Xhy

You’re a damn fool if you think this C-Suite has been open and transparent about anything.

Yes, they've been transparent about wanting to bail on them business. What they haven't done is provide sufficient justification for bailing on a core business. If they were taking advantage of the down market to fundamentally improve our mortgage operation, I think just about everyone would be on board with that. The problem is it's getting shut down simply because the id--t in the ivory tower doesn't like the mortgage business. Schart is incompetent or a JPM infiltrator, or perhaps some combination of both, but regardless he is destroying this company and intentionally doing so in such a way that it will be extremely difficult to recover from it. He's salting the earth.

This is old news. The bank has been open and transparent about wanting to scale down its mortgage business.

@@hls+1paj5Xhy. Can you explain why it’s a losing proposition? I was under the assumption higher rates meant more income. Am I wrong?

Right now it’s a losing proposition due to rates. When rates change we can build it back up. It doesn’t make sense to maintain its size when the market is contracting.

Hmm...

Hmm.

Thread regarding Wells Fargo & Co. layoffs

Things that make you go Hmm..."Wells Fargo Cedes Bank Mortgage Crown to JPMorgan After Pullback"

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