Wells Fargo concerned over mortgage-servicing fees
(But they are much more concerned about their servicing
business acts being too closely scrutinized.)
By David Benoit
NEW YORK (MarketWatch) -- Wells Fargo & Co. WFC +0.43% Chairman and Chief Executive John Stumpf expressed concern Friday about reports that Fannie MaeFNMA +0.40% and Freddie Mac FMCC -0.50% may cut the fees they pay servicers.
Speaking at the Bernstein Strategic Decisions conference in New York Friday, Stumpf emphasized that mortgage servicing remains a "very good business" for the bank. He said mortgage servicing has become more expensive, which led the bank to write down the value of its operations by more than $2 billion over the past few years. But even with those costs and extra work, mortgage servicing is key to how the bank operates its home-lending business.
But Stumpf also cited "discussion" that the government-sponsored enterprises--that is, Fannie and Freddie--may reduce the standard fees they pay to servicers.
"If it's overall smaller, then we'll also decide whether we want to be in that business or not," Stumpf said, though he added "I'm confident that...however [it] gets restructured, it won't be unfavorable to American consumers and...it will be good for Wells Fargo."
Mortgage servicing has become more expensive for the industry after a series of problems that turned up in foreclosure paperwork last year, leading to consent orders from regulators forcing servicers to hire additional staff.
Stumpf said he views the mortgage-servicing business as important because it helps to offset downturns in mortgage originations. Wells Fargo originates about one in every four mortgages in the country and services one in six, he said.
No comments:
Post a Comment