Talk about dominating the market.
A new report from Inside Mortgage Finance revealed that San Francisco-based bank and mortgage lender Wells Fargo snagged 33.9% of the mortgage market in the first quarter of 2012.
It was the biggest residential mortgage market share in recorded history, and comes thanks to a huge drop-off by its closest competitor, Bank of America, whose appetite for mortgages soured in recent months.
BofA stopped both reverse mortgage lending and accepting loan applications from correspondent lenders, which shrunk their presence in a hurry.
Instead of turning out to be the next Countrywide, they shifted their focus toward retail customers instead, focusing on quality over quantity it seems.
But with a waiting list of 90 days to refinance, Bank of America may be focused on other things, such as loss mitigation on all their existing mortgages.
Meanwhile, Wells’ market share increased from 30.1% in the fourth quarter of 2011 to 33.9% from the January to March period, which meant they originated roughly $130.5 billion of the $385 billion total.
No One Else Even Close
Amazingly, no other lender came even close to Wells Fargo. In fact, its closest competitor, Chase, claimed just 10.6% of the mortgage market during the first quarter.
And it dropped off quickly from there, with U.S. Bancorp coming in third with a paltry 5.2% of the market, followed by Bank of America with just 4.2%.
Even more astonishing, Wells Fargo’s market share bested the next seven largest mortgage lenders combined, and its first quarter numbers put it on track to crush last year’s already solid numbers.
The company originated $357 billion in mortgages last year, and if the first quarter is any indication, the numbers should reach somewhere close to $500 billion this year.
Wells also had an unclosed loan pipeline of $79 billion at the end of the first quarter, meaning many more mortgages are set to fund.
Is This Good or Bad for Homeowners?
I would say it’s a little of column “A,” and a little of column “B.”
Wells Fargo is probably the most conservative mortgage lender of its size out there, if not of any size.
Even during the crazy years, which led to the mortgage crisis, they stayed away from low credit score, high loan-to-value lending and no money down mortgages.
And they actually underwrote files, instead of approving everything under the sun.
So it’s probably a good thing that they’re leading the market as opposed to some other company.
Ideally, it means fewer mortgages will go bad, and that could help spur a housing market comeback.
At the same time, with Wells claiming more than one in every three mortgages, it means homeowners may not be shopping around as much as they should be.
As I always say, don’t be the guy or gal that gets a single mortgage rate quote. It’s one of the biggest mistakes you can make.
Their immense market share also means that if anything goes wrong, Wells could put that “too big to fail” mantra to the test.
If home prices slip and the markets crash, Wells would be in a bad position holding all those loans.
This article is so factually incorrect I don’t even know where to begin. Wells Fargo did plenty of subprime mortgages and they also did stated income 2nd mortgages to 100% LTV to anyone that had a 700 FICO score up to $250K. At one point they were holding $89 Billion in home equity 2nd mortgages of which 2/3 were in the sand states. (CA, NV, AZ and FL). That does not sound very conservative to me. Do your research before you write these kinds of articles because you sound like a fool to everyone who did business with Wells Fargo in the “crazy days” as you say.
Hmm…700 Fico to 100% LTV. Well, I suppose conservative is a relative term, considering many lenders at the time did 100% financing on investment properties with no documentation required with a 620 Fico. Or they allowed 100% financing with option arms. Either way, Wells is still here, and all those other companies that did what I just mentioned are gone.
Have you heard of FASB 20? The only reason they are still here is because they didn’t have to mark to market their portfolio of crap loans. You characterize Wells as some smart corporation that somehow knew what was on the horizon. They were just not as dumb as the other companies that went under. They also had the ability to borrow as much money as they wanted at the Fed window at near zero percent to keep brooming the garbage down the road. There will be a day of reckoning for Wells also. I did business with Wells quite a bit and they were not any smarter than anyone else or more conservative. They just got lucky and didn’t buy Countrywide. They were pretty stupid to buy Wachovia and their $130 Billion of pick-a-pay loans. They are still here because they are “Too Big to Fail”.