While Wells Fargo’s massive, ongoing fake-accounts scandal has resulted in congressional scrutiny and the ouster of the bank’s CEO, its mortgage business just keeps on growing
One might think that Wells Fargo’s massive fake-account scandal last year would have dealt a blow to the bank’s success. But you’d never tell by looking at the bank’s mortgage earnings.
Last year, it was revealed that Wells Fargo employees, under constant pressure to perform, had opened 2 million customer accounts without those customers’ knowledge or consent. The ensuing scandal brought with it widespread public condemnation, congressional scrutiny, the ouster of CEO John Stumpf and an internal investigation that’s still ongoing.
But all that doesn’t seem to have hurt the banking giant’s mortgage business a bit. Wells Fargo’s annual report showed that the bank’s origination volume rose from $213 billion in 2015 to $249 billion in 2016, according to a HousingWire report. Wells Fargo also reported that it received $347 billion in mortgage applications in 2016, up from $311 billion the year before.
But it’s not only an increase in applications that’s driving up originations. An analysis of the bank’s numbers show that it’s also denying fewer applications, and has done so for at least the last two years, HousingWire reported.
In 2014, Wells Fargo converted 66.8% of its applications into originations. That approval rate rose to 68.5% in 2015, and in 2016 it was up to 71.8%. But Wells doesn’t seem to be getting more mortgage originations because it’s relaxed its credit requirements, HousingWire noted. Indeed, Wells Fargo loans 30 days or more delinquent on Dec. 31, 2016 totaled $5.9 billion – only 2% of total non-PCI mortgages. On Dec. 31, 2015, that number was $8.3 billion – 3% of non-PCI mortgages.
