https://worldnews.upexampaper....-more-mortgage-news/

So it looks like the housing market is starting its correction.



Wells Fargo confirmed Friday it’s laying off an undisclosed number of home lending employees due to mortgage market conditions, one week after reporting a major decline in origination volume.

The bank in a brief statement didn’t specify which employees were affected nor the amount of staff displaced, and didn’t immediately respond to follow-up questions Friday afternoon.

It’s the third major mortgage player this week to announce cuts in response to sliding mortgage volumes, following embattled lender Better.com and technology firm Blend.

“The home lending displacements this week are the result of cyclical changes in the broader home lending environment,” the bank said in a statement. “The employees affected by these changes have each been an essential part of our success. We are carrying out displacements in a transparent and thoughtful manner and providing assistance, such as severance and career counseling.”

Wells in an earnings report last week disclosed a 33% drop in origination volume, a freefall CEO Charlie Scharf said was “one of the largest quarterly declines that I can remember.” The bank’s net origination income fell to $538 million in Q1 2022 from $1.38 billion over the same period last year. While the lender reported positive servicing income compared to net loss a year earlier, its Q1 2022 mortgage banking income totalled only half the amount it made in the first quarter of last year.

Reports of the layoffs first emerged on social media, where posts indicated the cuts included 550 mortgage processors.

A number of mortgage firms have laid off employees in response to the end of the refinance boom, with Blend cutting 10% of its workers and Better.com shedding over a third of its entire workforce in a series of large layoffs. PennyMac, Interfirst and Guaranteed Rate have also reduced their head counts in recent months.

Wells has also been under fire in the past two months over allegations of discrimination in handling Black homeowner refis. The bank is facing scrutiny from New York City officials and Capitol Hill, and is responding to two federal class action lawsuits.

quote:

Originally posted by Flash-LB:

So it looks like the housing market is starting its correction.

Let's hope so. Homes around here that just a couple of years ago sold for $250 are now being sold sight-unseen for $750 in a matter of days.

It's insane.

Wells Fargo can FOAD. Last year we tried to refi with those guys. The level of incompetence displayed was mind numbing. Weeks go by..."we're reviewing your application...", "...please send us XXX documentation...", what, you mean the documentation I already sent and you could see if you bothered to look?

We ended up firing them and telling them neither me or any of my children will be dealing with them in the future.

It's a highly cyclical business, so somewhat expected. I do feel for those that have lost their jobs though. Was laid off 1 time in my life, shortly after 9/11. That experience taught me to be much more compassionate when people lose their jobs.

The job market is much better than it was post 9/11. It took me over a year to find a job and set me back probably 3 or 4 years career wise.

While I believe the housing market is starting to slow down with rates going back up (houses seem to be sitting for actual days and weeks again around here and not snapped up that day) this is more a Wells Fargo issue as they are in trouble with all the crap they pulled finally catching up to them.

Maybe not, as it's not just Wells Fargo.

https://www.bloomberg.com/news...ands-as-volume-drops

Mortgage Businesses Seen Laying Off Thousands as Volume Drops
Some staff can be moved to other businesses, but many can’t
Refinancing applications drop by about 45% in six monthsU.S. home mortgage lenders have spent much of the last two years hiring. Now they might have to spend the coming months laying workers off.

The number of people working as brokers for mortgages and other kinds of loans, a proxy for total home lending employment, has surged more than 50% to around 130,000 since late 2019, according to the U.S. Bureau of Labor Statistics. That’s right around the highest level since early 2006, just before the financial crisis.

But mortgage rates have been rising since August, reaching 3.92% last week, the highest since May 2019. With borrowing more expensive, applications to refinance mortgages have fallen about 45% in the last six months, according to the Mortgage Bankers Association.

Some lenders have already begun to cut back. Mortgage lender Homepoint Capital laid off nearly 10% of its workforce. Better.com, an online mortgage lender, fired around 900 workers in December during an infamous video conference call.

Lenders in general are trying to find more work for their staff by lowering their standards a bit. The credit rating for the average borrower whose loan is bundled into a mortgage bond backed by Fannie Mae or Freddie Mac fell to 733 in January from 750 a year earlier, according to data compiled by Bloomberg. That’s still a prime level for the FICO scale that goes from 300 to 850.

Perhaps. Since inflation is going crazy I wouldn’t expect or count on finding any housing “deals” anytime soon.

You still have a house inventory issue. Lots of dollars chasing not enough houses. The construction side is no where near building to keep up. Labor, supplies, it’s a tsunami of reasons new construction can’t fill the breach.

I wouldn’t bet the farm on a large correction yet.

Plus, people have short memories. 3% mortgages aren’t the historical norm. Not even close.

I'm willing to believe. My WAG was that we'd be in the other end of a correction in a couple of years, but my crystal ball is no better than most peoples'. And the Fed (per last week's WSJ) is hurting for opportunities to kick rates up without inducing shock.

quote:

So it looks like the housing market is starting its correction.

I would not bet on it in many areas.

Home lending and real estate are two different businesses. Much of Home lending the last few years has been refinancing. Getting a small house ready to sell in Seattle WA in May. The real estate market there is absolutely nuts up there.

quote:

Originally posted by pedropcola:
Perhaps. Since inflation is going crazy I wouldn’t expect or count on finding any housing “deals” anytime soon.

You still have a house inventory issue. Lots of dollars chasing not enough houses. The construction side is no where near building to keep up. Labor, supplies, it’s a tsunami of reasons new construction can’t fill the breach.

I wouldn’t bet the farm on a large correction yet.

Plus, people have short memories. 3% mortgages aren’t the historical norm. Not even close.

I agree.

quote:

Originally posted by RobLew:
Wells Fargo can FOAD. Last year we tried to refi with those guys. The level of incompetence displayed was mind numbing. Weeks go by..."we're reviewing your application...", "...please send us XXX documentation...", what, you mean the documentation I already sent and you could see if you bothered to look?

We ended up firing them and telling them neither me or any of my children will be dealing with them in the future.

Early 2000’s when rates were dropping fast we called them about a re-fi as W-F bought our mortgage from the previous lender. We were refused as in the opinion of the loan officer, in his exact words “You don’t owe enough to make this loan worthwhile.” I protested and to toldd him truthfully that we were house shopping and had been for awhile, this was to no avail.

So I found another lender. That loan officer said he would write it but asked if we would get the mortgage when we found another house, we agreed on that.

About two weeks before closing another loan officer from W-F called inquiring why we went with a different company as they were offering competitive rates. I then told him how we were blown off and the reason for that. He asked if I remembered that persons name. “Oh yeah, here’s his name, dates and times, is there anything else you need?” was my reply.

His response was that he, that particular loan officer and his manager were going to have a nice chat…….

quote:

Originally posted by Jelly:
Home lending and real estate are two different businesses. Much of Home lending the last few years has been refinancing.

What's the speculative house building market like up there? Around here, you can buy an old house of 1900 square feet or less, or you can buy a brand-new McMansion. Ain't nothin' in between because the people who own those houses can't afford to replace their house if they sell.

Honest question as I really don’t know.
Why would anyone use these gigantic mega lenders for a mortgage in the first place?
What benefit is there?
We have always used a local bank. Their closing costs are minimal, they offer the same interest rates as everyone else, the don’t sell your mortgage, and I can talk to my actual mortgage person in person pretty much whenever needed.

quote:

Originally posted by Black92LX:

Honest question as I really don’t know.
Why would anyone use these gigantic mega lenders for a mortgage in the first place?
What benefit is there?
We have always used a local bank. Their closing costs are minimal, they offer the same interest rates as everyone else, the don’t sell your mortgage, and I can talk to my actual mortgage person in person pretty much whenever needed.

Last mortgage that we had was initiated with a local bank. Everything was fine for a few years, then the bank folded and was absorbed by Chase. Nothing but problems after that, so we dug into savings and paid the mortgage off; Chase gave me some grief about that, told me that I had to come in to the local branch. I told them to pound sand, they had accepted the check and if they wanted to speak with me in person they could make an appointment to come and see me.

quote:

Originally posted by V-Tail:
[QUOTE]Originally posted by Black92LX:

Honest question as I really don’t know.
Why would anyone use these gigantic mega lenders for a mortgage in the first place?
What benefit is there?
We have always used a local bank. Their closing costs are minimal, they offer the same interest rates as everyone else, the don’t sell your mortgage, and I can talk to my actual mortgage person in person pretty much whenever needed.

Last mortgage that we had was initiated with a local bank. Everything was fine for a few years, then the bank folded and was absorbed by Chase. Nothing but problems after that, so we dug into savings and paid the mortgage off; Chase gave me some grief about that, told me that I had to come in to the local branch. I told them to pound sand, they had accepted the check and if they wanted to speak with me in person they could make an appointment to come and see me.[/QUOTE

Our original was with a in-state bank and their mortgage department. That was sold off to Norwest Bank out of Minnesota which sold out to Wells Fargo.

quote:

Originally posted by Black92LX:
and I can talk to my actual mortgage person in person pretty much whenever needed.

Old lesson from Mom: "Always keep your banker and your attorney within strangling distance." It was advice she had learned from her boss: an attorney.

Meanwhile, Fortune Magazine sez that if prices keep going up at the current rate some economists are beginning to expect that we'll see another housing market bubble.

http://www.yahoo.com/finance/n...close-215143199.html

quote:

Originally posted by Jelly:

quote:

So it looks like the housing market is starting its correction.

I would not bet on it in many areas.

Home lending and real estate are two different businesses. Much of Home lending the last few years has been refinancing. Getting a small house ready to sell in Seattle WA in May. The real estate market there is absolutely nuts up there.

Nope, this I truly believe is the directional change many people (including me) have been watching for. And though you are right that sales and lending are two different businesses, they are inexorably attached at the hip given that when lending slows the RE market is not far behind it. And refi's are about over too at this point given mortgage rates have now risen a couple points. The cheap money ride is almost over. God help the market with all the other negative economic impacts coming to bear right now too.

I'm up in the air about whether this is a housing correction. I'll be in the market starting next year so I'm interested.

How I see this is that with banks are getting ahead of the interest rate hikes. With interest going up, there will be less demand for refinancing, at least, plus buyers on the margin will be priced out of mortgage qualifications.

If we see whole sale price decreases on homes, then I'd consider that a correction.

Well yeah, interest rates jumped up 4% in 2 months.

This message has been edited. Last edited by: SIG4EVA,