Wells Fargo & Co. earned $3.1 billion from its residential mortgage banking business in the third quarter and is seeing lower than expected losses on the "Pick-a-Pay" ARM portfolio it inherited when it bought Wachovia Corp. last year. While its mortgage banking earnings increased by 243% (compared to the same period last year), it originated $96 billion in new home mortgages, a 25% decline from the second quarter but more than double what it produced in 3Q08 when the credit markets froze up and mortgage lending and housing went into a freefall. (The entire bank earned $3.2 billion in 3Q09).
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