NY AG: 2 Banks Violated Mortgage Accord - ABC News

New York's attorney general on Monday accused Wells Fargo and Bank of America of violating the terms of last year's national mortgage settlement by failing to process hundreds of refinancing requests promptly.

Read more: NY AG: 2 Banks Violated Mortgage Accord - ABC News

Profits soar at 2 largest mortgage lenders - Yahoo! Finance

NEW YORK (AP) — Is the mortgage market really back?

The country's two biggest mortgage lenders, Wells Fargo and JPMorgan Chase, reported Friday that a surge in home lending pushed them to record profits.

JPMorgan CEO Jamie Dimon declared that the housing market "has turned the corner." Wells Fargo CEO John Stumpf said that "every quarter, we have more confidence."

Wells said it issued $139 billion in mortgages from July through September, compared with $89 billion in the same period last year. JPMorgan wrote $47 billion in mortgages, compared with $37 billion last year.

Read more: Profits soar at 2 largest mortgage lenders - Yahoo! Finance

Mortgage loans boost results for Wells Fargo - USATODAY.com

Wells Fargo reported higher earnings, higher revenue and a record number of mortgage applications on Friday.

It's just that nobody was paying all that much attention.

The spotlight instead was on JPMorgan Chase, where executives fielded questions about a giant $5.8 billion trading loss.

Then again, that's the way Wells Fargo usually works: getting ahead by staying under the radar.

The comparison was not lost on Wells Fargo's chief financial officer, Tim Sloan.
"It's not that we don't make mistakes," he said in an interview with the Associated Press. "But we don't take on a risk and then decide that the way we get comfortable with it is by hedging it. We just don't do it in the first place."

The bank, based in San Francisco far from its New York peers, was considered a large regional bank until the end of 2008, when it stepped onto the national scene by scooping up Wachovia, a major bank in the South that was teetering on the brink of collapse.

Wells Fargo has since staked its reputation on mortgages, churning out more loans than any other bank. It's fond of pointing out that, at least compared with peers, it relies more on plain-vanilla customer lending than investment-banking services that can carry big profits but also big risk. It's now the biggest U.S. bank by market value, a crown it took from JPMorgan.

When Moody's downgraded the ratings of most of the major banks last month, Wells Fargo escaped intact.

The Associated PressPosted Jul 14, 2012



Mortgage loans boost results for Wells Fargo - USATODAY.com

Why it's time to break up the 'too big to fail' banks - The Term Sheet: Fortune's deals blog Term Sheet

FORTUNE -- America is downsizing. Whether it's the food we eat, the cars we drive, or the houses we live in, Americans are concluding that smaller is better. Even U.S. corporations are starting to see the benefit of more Lilliputian institutions; the impending -- and widely hailed -- breakups of McGraw-Hill (MHP) and Kraft (KFT) are two examples.

So what about banks? It would surely be in the government's interest to downsize megabanks. Sen. Sherrod Brown (D-Ohio) continues to push his bill to split apart the largest institutions. Regulators have new authority to order divestitures under the Dodd-Frank financial reform law. From a shareholder standpoint, government breakups have a pretty good outcome. It worked out well for John D. Rockefeller, whose shares in Standard Oil doubled after it was ordered to break up. Ditto for those who owned stock in AT&T (T).

Yet with gridlock in Washington, don't count on politicians for a solution.

Shareholders, however, have an interest in demanding that big banks split apart.

Comparing the valuation for the supersize banks (Citigroup (C), Bank of America (BAC), and J.P. Morgan Chase (JPM)) with their simpler, leaner competitors isn't pretty. Price/earnings per share for the supersizers averages 5.8, compared with 8.1 for smaller, more focused Wells Fargo (WFC) and 8.1 for the bigger regional banks like U.S. Bancorp (USB) and PNC (PNC). More telling is the ratio of share price to tangible book value. For the supersizers, the average is 72% of book, compared with 165% for Wells and 142% for the big regionals. Chase's strong performance holds up the average for the supersizers, but even its price to book is only 110%. Wells' superior performance suggests that complexity is a bigger drag on returns than size is. Even though Wells' assets exceed $1 trillion, it has pretty much stuck to its basic business of taking deposits and making loans, and in the process has consistently delivered solid returns.

10 best stocks for 2012

Before the financial crisis, the supersizers benefited from high levels of leverage and cheap debt funding costs from their "too big to fail" status. All that has changed. Capital requirements are going up significantly for mega-institutions. The cost of borrowing will rise, too, as bondholders come to realize that Dodd-Frank means what it says: no more bailouts. New rules on liquidity, proprietary trading, and derivatives will also eat into earnings. So it is hard to see how the megabanks' numbers can improve.

Supersizers argue that their scale is necessary to meet the financial needs of multinational corporations. But it's not clear that multinationals find it advantageous to do business with a handful of financial titans. Dealing with smaller, more focused institutions provides specialized expertise and less risk of conflicts. If there were really that much value in supersizer services, presumably it would show up in shareholder returns. But it doesn't.

Supersizers also argue that their economies of scale can lower costs for customers. Studies show that some economies of scale do exist, but they are limited by management difficulties in overseeing many different business lines. So while average overhead costs go down, average revenues go down even more. This effect can be mitigated by strong management, as Chase's exceptional performance demonstrates. But how many Jamie Dimons are out there?

At the beginning of the year, Citi's share price was trading at 58% of tangible book value, while BofA was trading at 48%. If Citi and BofA were broken up into smaller institutions that traded at price to tangible book ratios on par with the average of the big regionals, their shareholders would see $270 billion in appreciation. JPM shareholders would see $52 billion in appreciation.

So, shareholders, get ye to the boards that represent you and ask them loudly about whether your company would be worth more in easier-to-understand pieces. The public-policy benefits of smaller, simpler banks are clear. It may be in the enlightened self-interest of shareholders as well.

by Sheila Bair CNNMoney.com Jan 18, 2012

Why it's time to break up the 'too big to fail' banks - The Term Sheet: Fortune's deals blog Term Sheet

Chase, Wells Fargo drop plan to charge fee for debit cards

A month after Bank of America got pummeled by consumers and lawmakers for introducing a monthly debit-card fee, other big banks are backing off plans to charge customers for using their debit cards.

JPMorgan Chase has decided not to charge customers to use their debit cards, according to a source with knowledge of the plans but who isn't authorized to discuss the matter.

Wells Fargo also announced late Friday that it has cancelled plans to test a debit card fee in five states. "Wells Fargo remains committed to helping our customers succeed financially and we believe this decision is in the best interest of our customers," a Well Fargo spokesperson said.

In February, Chase launched a pilot program that charged customers in Georgia and Wisconsin a $3 monthly debit card fee. The program will expire in November and Chase doesn't plan to extend it, according to the source.

Consumers Union applauded the decision and called on Bank of America to rescind its plans to start charging customers a $5 monthly debit card fee, starting in 2012.

"Consumers Union has heard from thousands of consumers across the country who are outraged that Bank of America is instituting the $5 monthly debit card fee," said Norma Garcia, manager of Consumers Union's financial services program.

"We always take into consideration feedback we receive from our customers," a Bank of America spokesperson said in response, "and are committed to being clear and transparent about our fees so that customers understand their options in paying for services and ways they can avoid fees."

Starting in November, SunTrust, a major regional bank, will charge customers a $5 monthly debit card fee. Regions Financial, based in Birmingham, Ala., has also added a $4 monthly debit card fee. Wells Fargo is testing a $3 monthly fee in some of its markets.

Banks that have raised their fees said a regulation that took effect Oct. 1 left them with no other choice. That regulation cut in half the fees financial institutions can charge retailers whenever consumers use their debit cards for purchases. The regulation exempted banks and credit unions with assets of less than $10 billion.

But other big banks have made of a point of publicizing the fact that they don't charge a debit card fee. Citibank earlier said it decided not to charge a debit card fee because customers made it clear that they didn't want to pay for the convenience of using their cards. TD Bank put out a press release Friday stating that it will continue to offer its customers debit cards with no monthly fee.

TD Bank said a survey of its customers revealed that 70% would discontinue their account if the bank charged a debit card fee.

Most small banks and credit unions don't charge debit card fees. In an effort to attract new deposits, some of those institutions have launched advertising campaigns urging angry customers of big banks to switch accounts.

A grassroots effort on Facebook has designated Nov. 5 "Bank Transfer Day" and is encouraging consumers who are unhappy with new bank fees to move their accounts to credit unions or community banks.

by Sandra Block USA Today Oct. 28, 2011 04:25 PM



Chase, Wells Fargo drop plan to charge fee for debit cards

Wells Fargo, Arizona homeowners settle mortgage-loan case

Mortgage relief is on the way for Arizona homeowners who took out "pick-a-pay" loans from two companies that since have been acquired by Wells Fargo.

Wells Fargo has agreed to provide more than $150 million in mortgage relief to homeowners who obtained the adjustable-rate loans through Wachovia Corp. and Golden West Corp. The move will come about as part of a settlement announced by Attorney General Terry Goddard, who alleged that the loans were marketed deceptively.

About 1,700 Arizonans obtained the loans through one of the two companies.

Under the terms of the settlement, Wells Fargo admitted no wrongdoing. But Mike Heid, co-president of Wells Fargo Mortgage, said that mortgage relief would benefit the community.

"We agree with the attorney general that in light of the unprecedented changes in our economy, we must continue to take steps to stabilize communities through the program enhancements such as we are announcing today," he said.

The agreement includes $86 million in loan-principal forgiveness for Arizona homeowners. To be eligible, borrowers must be living in the home and either at least 60 days delinquent on their mortgages or facing imminent default.

Goddard said marketing materials from Wachovia and Golden West violated the Arizona Consumer Fraud Act. The companies did not fully explain that borrowers who made minimum payments in the first years of their loans were not paying all the accrued interest and that unpaid interest was then added on to their loans as principal, he said.

When borrowers started to face full monthly payments, they often found much higher loan balances than they expected.

"These pick-a-pay loans were marketed in a way that downplayed the risks," Goddard said. "We believe a great many Arizonans were deceived, defrauded or fooled into taking out a loan that ultimately was a trap."

Arizona led the investigation and was joined by Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington. The settlement includes $772 million in total mortgage relief for those states, affecting nearly 9,000 borrowers.

Goddard said the loans contributed to Arizona's housing crisis. Half of all Arizona mortgages are "underwater" - owners owe more than their homes are worth - and more than 41,000 Arizona homes are in foreclosure, the Joint Legislative Budget Committee says.

The number of pick-a-pay borrowers who face ballooning payments will increase sharply next year, Goddard said, adding further instability to the housing market.

Wells Fargo customers who had mortgages through Wachovia or Golden West can get information about the program by calling 1-888-565-1422.

by Casey Newton The Arizona Republic Oct. 7, 2010 12:00 AM




Wells Fargo, Arizona homeowners settle mortgage-loan case

Two Cachet Homes subdivisions in East Valley facing trustee sale

Phoenix Business Journal Jan Buchholz Friday, February 5, 2010

Wells Fargo Bank NA filed a notice of trustee sale on two subdivisions being developed by Phoenix-based Cachet Homes: the 25-acre Stratland Shadows parcel in Gilbert and the 5.6-acre Serenity Shores community in Chandler.

Both properties are scheduled to be sold at auction April 15.

Wells Fargo loaned Cachet $37.2 million for the Gilbert property and $15.8 million for the Chandler property. Neither Cachet nor Wells Fargo representatives would comment on the matter because of on­going negotiations.

“We cannot comment about this matter because our customer relationships are confidential,” said Wells Fargo spokeswoman Marjorie Rice.

Cachet is one of the few private home builders in Phoenix remaining in business despite the housing crisis of the past three years. The boutique home builder was founded in 1990.

These are not the first Cachet properties that have encountered problems.

Wells Fargo foreclosed on a 16-acre property in the Buckeye master-planned community of Verrado in February 2008. The bank took back the land from Cachet and sold it to Meritage Homes in November 2009, according to Zach Bowers, a real estate analyst with Ion Data, a Mesa research firm.

Two other properties — subdivisions in the Vistancia master-planned community in Peoria — also went back to the bank that originally financed them. RBC Centura Bank filed for foreclosure on the 19-acre and 16-acre properties in April 2008. RBC still owns those parcels, Bowers said.

Even though its Serenity Shores community is facing foreclosure, Bowers said Cachet took out three building permits Jan. 15 for single-family homes there.

“There may be other builders in similar situations to (Cachet’s), but none come to mind at this moment,” said Jim Belfiore, founder of Phoenix-based Belfiore Real Estate Consulting, which provides services to home builders. “Most of the builders that will not survive, I believe, have conceded and gone out of business.”

Ben Sage, director of Metrostudy’s Arizona division, said a few private builders — such as locally owned Fulton Homes — have been able to survive by filing for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

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