Wells Fargo & Co. funded $81 billion of home mortgages in the second quarter, a 38% decline from the same period last year, but enough to best its top rival in home lending, Bank of America.
Wells' showing in the quarter is yet another sign that residential lending in the U.S. is continuing to wane, right along with home building and existing house sales — despite ultra low mortgage rates.
According to Wells' just released earnings statement, the mega bank is continuing to struggle with nonperforming first and second liens. At June 30 the bank controlled $15.2 billion of non-accruing home mortgages, a 23% increase from six months ago. (Its biggest problem, by far, is nonperforming firsts, which now total $12.9 billion.)
In its earning statement Wells noted that, "Residential nonaccrual loans are written down to net realizable value at 180 days past due, except for loans that go into trial modification" prior to being 180 days past due.
Wells Fargo Home Mortgage posted $2 billion in noninterest income during the quarter, $800 million of which came from origination activity with the balance coming from servicing.
For several quarters Wells has maintained its position as the largest lender in the U.S. In 2Q B of A funded $72 billion of home mortgages.
At June 30 Wells serviced $1.88 trillion of residential loans, compared to $1.78 trillion a year ago. However, its ratio of MSRs related to loans serviced for others fell to 0.76% from 0.91% in the same period a year ago.
Despite problems in residential finance, the entire bank earned $3.06 billion in the quarter, just about flat from 2Q09.
