Wells Fargo Controls One-Third of This Year's U.S. Mortages
|Business is booming at Wells Fargo.|
Through the first half of 2012, Wells Fargo controlled one-third of all new U.S. mortgages -- a market share greater than the next seven lenders combined, industry publication Inside Mortgage Finance announced in May.
How did this happen? Wells Fargo insists it's because of Wells Fargo's quality service, Bloomberg reported today, citing a memo the bank sent to mortgage employees last week.
"Serving customers very well means that more customers and clients choose us and reward us with their business," the memo read, according to Bloomberg. "Doing this better than any other home lender gets measured as market-share growth."
Another key reason is that many other banks have drawn down their mortgage lending since the housing bubble burst. Countywide Loans, for instance, was the most prolific lender during the boom. These days Countrywide, since purchased by Bank of America, is best known as the poster boy for racist lending practices (BofA settled a lawsuit with the Department of Justice for $335 million). Not that Wells Fargo's hands are totally clean. Last month, the San Francisco-based bank settled its own DOJ lending-discrimination suit for $175 million.
But Wells Fargo, along with JP Morgan Chase, didn't take as many dumb risks during the bubble as most other banks. Now you see more Chase ATMs than Starbucks, and Wells Fargo dominates the housing loan market. Bloomberg reported that the bank has had 13 straight profitable quarters. In the first two quarters of 2012, Wells Fargo has made nearly $6 billion in mortgage-related income.
With other banks hesitant to invest substantially in the housing market, Wells Fargo fills a gap, providing low-interest credit at a time when the economy desperately needs more cash in consumers' pockets. Along the way, the banks gets cash in its own pockets, too. From the bank's perspective, there is nothing broken to fix.