Wells Fargo & Co., the biggest U.S. home lender, may earn higher profits in the U.S. mortgage market as rivals flee from angry homeowners, more powerful regulators and billions of dollars in losses.
Wells Fargo originated $89 billion of mortgages in the third quarter, more than the combined total of JPMorgan Chase & Co.’s $37 billion and Bank of America Corp.’s $33 billion, according to company statements. Bank of America plans to close a mortgage unit that contributed more than 50 percent of its new mortgages in the second quarter.
“When you think about being able to grow our mortgage business today, it’s a huge opportunity for us,” Wells Fargo chief financial officer Timothy J. Sloan said in an interview this week. “It’s more difficult for some of our competitors, without being specific, than it is for us because they weren’t as disciplined as we were. We weren’t perfect, but we were disciplined.”
Wells Fargo may pick up market share and generate bigger profits as competitors cut operations or leave the market altogether. The housing crisis forced more than 100 mortgage lenders to close or seek buyers since the start of 2007. Now mortgage-market reforms are raising the regulatory burden and making it difficult for smaller firms to compete, said Glen Corso, managing director of the Community Mortgage Banking Project, a coalition of smaller, independent lenders.
Wells Fargo chief executive John G. Stumpf said this week that his company now originates one in every four U.S. mortgages, a position held by Bank of America as recently as 2007. The figure is even higher for refinancing, Stumpf said.
