Wells the Correspondent King, but More Bidders to Appear?

Wells Fargo & Co. bought almost $70 billion of closed mortgages from correspondent originators in the third quarter amid scattered reports that there are more bidders in the secondary market that want to buy loans on a servicing-released basis.

The correspondent channel accounted for 49% of Wells’ residential production in the quarter, according to figures compiled by National Mortgage News and the Quarterly Data Report.

Wells, of course, ranked first among all correspondent buyers followed by JPMorgan Chase ($22 billion bought) and U.S. Bank Home Mortgage ($14 billion). All figures are rounded.

Although secondary market sources say there are more bidders for whole loans these days, pricing for servicing-released mortgages has not improved all that much.

“Actual pricing levels remain unchanged with the aggregators offering well below economic value and retention strategies expanding aggressively,” said servicing advisor Tom Piercy of Interactive Mortgage Advisors. “We do have more bids in the market today which is good but yield targets remain high, hence values remain below what many perceive as actual economic value.”

As for Wells, in 2Q it purchased $61 billion of home mortgages from correspondent funders with the channel accounting for 46% of production.