Wells Fargo Sees Home Equity Deterioration

Wells Fargo charged-off $307 million more of second lien mortgage debt in the third quarter than in the second, and the company says home equity losses will remain "elevated" until housing markets stabilize. The company also saw first mortgage charge-offs increase by $43 million in the third quarter. All told, Wells charged-off $780 million in first and second mortgages in the third quarter. The company also saw a 21% decline in home loan origination volume from the prior year period. However, Wells said that lower loan origination income was partially offset by higher servicing fee income on its $1.56 trillion loan administration portfolio. Overall, the company's net income fell 24%, with $646 million of writedowns related to investments in Fannie Mae, Freddie Mac and Lehman Brothers also trimming Wells Fargo's third quarter results.