Magazine article Mortgage Banking

An Industry Called to Action

Magazine article Mortgage Banking

An Industry Called to Action

Article excerpt

Looking back over the past several months, I feel optimistic about what lies ahead for the housing industry.

Consumer confidence is rebounding, and the markets are responding. Homebuyers and those seeking to refinance their mortgages are taking advantage of the low rate environment and housing-price declines. It appears home inventories are beginning to stabilize in areas of our country. Thanks to government programs and proprietary solutions, customers challenged with their mortgage payments have more options to avoid foreclosure. And when solutions can't be found, foreclosed properties are selling more quickly than before.

In other words, the tide may very well be turning.

Rebuilding home lending

This first quarter of 2009 demonstrated resilience in mortgage lending. Consumers, analysts and investors eagerly awaited the earnings reports of the top four financial services companies (Bank of America, Charlotte, North Carolina; Citigroup Inc., New York; JPMorgan Chase & Co., New York; and Wells Fargo & Co., San Francisco) and speculated on the outcomes. Stronger-than-expected mortgage performances helped to buoy revenues and enabled the top four to deliver positive financial results.

The first quarter of 2009 was one of the best ever for Wells Fargo's mortgage business. Thanks to the Federal Reserve and Treasury stimulus programs and resulting rate drops, almost half a million families came to us to purchase or refinance their homes. As an example, Wells Fargo noted in our first-quarter earnings report that we accepted $190 billion in mortgage applications, including a record $83 billions in March. This is an increase of 64 percent from the prior quarter, and we have a pipeline of another $100 billion in queue. We generated $101 billion in mortgage originations, up 102 percent from the prior quarter. We continue to see sustained interest in mortgage applications and fundings. In fact, the first quarter was our best mortgage origination quarter since 2003.

So is this level of activity sustainable and is the housing industry finally correcting? Rates continue to be favorable and tax incentives help make a new home purchase very attractive for some buyers. All eyes remain on home-price declines, which appear to be leveling off, and pending home sales experienced slight gains in March. The primary obstacle in the housing market's return to full health is the "what ifs" consumers face related to unemployment, underemployment and rising debt.

Inspire. Educate. Enable.[sm]

That said, as an industry we can work to stimulate demand for home buying for credit-ready borrowers. We can educate people, helping them to understand the types of mortgages now available to them and how to manage their credit. And we can provide them with services and products that make homeownership achievable and sustainable.

As an example of how eager people are to hear and become ambassadors of this message, in mid-March we staged our annual CineMeeting for real estate professionals. Nearly 11,000 Realtors[R] and other professionals attended this event, which we televised in theaters around the country.

Together with the National Association of Hispanic Real Estate Professionals (NAHREP), San Diego; the National Association of Real Estate Brokers (NAREB), Washington, D.C.; the Asian Real Estate Association of America (AREAA), Carlsbad, California; and the National Association of Realtors (NAR), Chicago--through this event and others--we allow people to see the many benefits homeownership brings. …

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