The housing bust ended several years ago, but the big mortgage banks are still acting as if the home loan business were fraught with peril, the New York Times reported today. Executives from Wells Fargo, the nation’s biggest mortgage bank, said yesterday that important changes had to be made before they might consider increasing the flow of credit. In the third quarter, Wells Fargo’s mortgage banking income totaled $1.63 billion, a small rise from the $1.61 billion in the third quarter of 2013. Since the financial crisis led the Federal Reserve to cut interest rates, Wells Fargo has made billions of dollars in its mortgage unit, as mortgage borrowers rushed to the bank to refinance. Wells Fargo does not hold most of the mortgages it makes. Instead, it books a profit when it packages the loans into bonds and sells them to investors. An increase in the profitability of such sales is a reason Wells Fargo’s mortgage banking revenue went up in the third quarter even as the bank underwrote far fewer loans.
