The Bankwatch

Tracking the consumer evolution of financial services

Wells Fargo mortgage business leaps ahead

The effect of low interest rates, low home prices, and elimination of ‘irrational’ lenders has paved the way for Wells, and likely the other recognised bank names to gather large amounts of new mortgage business in the US.

I would estimate that banks are not taking undue risks and have tightened credit policies, however this is precisely the moment for regulators to perform that double check as part of their stress testing, both to ensure no re-occurrence of 2007/8, and to assure the public that this is based on solid growth.

Incidentally that stress test result was due early in April and it was recently noted it has been delayed until late April until after the Bank’s results were announced.  There was speculation that the stress test results were not good – only speculation at this point.

Wall St jumps on mortgage resurgence | Globe and Mail

Yesterday, Wells Fargo & Co. WFC-N stunned investors by saying it expects to report a record profit of $3-billion (U.S.) in the first quarter, owing to a surge in its mortgage business. The bank said it handled $190-billion worth of mortgage applications in the quarter, up 64 per cent from the last quarter of 2008. In March alone, the San Francisco-based lender said it processed a record $83-billion worth of mortgage applications.

“We had incredible [mortgage] volume increases in the quarter,” said Howard Atkins, the bank’s chief financial officer. “People are buying homes.”

UPDATE:

From San Francisco Chronicle.  Some expectation management going on here, to avoid publishing the stress test results alongside earnings results.

Federal regulators have told the nation’s largest banks to keep quiet about their performance on government stress tests. They fear investors could punish companies with nothing to brag about.

In letters to the 19 banks undergoing tests of their financial strength, regulators told the companies not to disclose their performance during upcoming earnings announcements, according to industry and government officials who requested anonymity because they are not authorized to discuss the process.

Written by Colin Henderson

April 10, 2009 at 14:32

Posted in Uncategorized

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