Higher repurchase demands trimmed Wells Fargo’s take from its mortgage banking unit in the second quarter, but net profit gains from residential lending and loan sales rose a stunning 200% from the same period a year ago.
The nation’s largest residential funder/servicer reported total mortgage banking income of $2.9 billion in the second quarter, down $23 million the quarter prior.
Net gains on originations and sales totaled $2.2 billion after deducting $669 million for loan repurchases. In the first quarter, Wells Fargo posted $2.6 billion from originations and sales after provisioning $430 million for buybacks.
The 55% jump in the “repurchase provision was primarily attributable to an increase in projected demands from the GSEs on loans sold between 2006 and 2008,” the company said.
In the second quarter of 2011, Wells Fargo reported just $742 million in net gains on originations and loan sales.
The nationwide lender originated $131 billion of single-family loans in the second quarter, up about $2 billion from the prior quarter.
In the quarters ahead Wells’ originations likely will fall now that it is abandoning the broker/wholesale channel. (See related stories on this website.)
As of June 30, Wells Fargo had loan applications totaling $102 billion in pipeline, up 30% from the end of the first quarter.
Servicing fee income totaled $679 million in the second quarter, compared to $252 million in the quarter prior.
