Posted on 10/11/2013 8:05:09 AM PDT by whitedog57
The climate for mortgage lenders is definitely taking a downward turn.
Wells Fargo has released their Q313 Quarterly Supplement which revealed a shrinking mortgage pipeline.
WFC Originations_0 (1)
Of course, this is not surprising given a rise in mortgage rates starting May 1st (Q2) and declining real household income.
rhoinmbrate
But the humming dragon lingering in the background is the cost of litigation for originating and servicing mortgage loans. According to JPMorganChase’ Q3 earnings report, they paid a staggering $9.15 billion in pretax legal expenses.
JPM Q3 1 addbacks_0
And then there is SunTrust which has been ordered to pay over $1 billion in mortgage settlements.
Oct. 11 (Bloomberg) — SunTrust Banks Inc., Georgia’s biggest lender, said third-quarter earnings will be cut by $179 million, or 33 cents a share, after it reached settlements with U.S. officials over claims tied to faulty mortgages.
SunTrust will offer $500 million in consumer assistance and make a cash payment of $468 million as a result of an agreement with the Department of Justice and the Department of Housing and Urban Development, the Atlanta-based bank said yesterday in a statement. Those agreements primarily will result in a $323 million charge in the third quarter, the company said.
The Federal Reserve also issued $160 million in sanctions against the company for “unsafe and unsound processes and practices in residential mortgage loans servicing and foreclosure processing,” the central bank said yesterday in a statement. SunTrust expects to satisfy that penalty through the $500 million in consumer relief, according to a filing.
Faulty mortgages? There was no house when the borrower showed up with the keys?
MissingHouse
The Federal and State governments along with Attorneys General (including Eric Holder) have really tried to delay foreclosures even when borrowers have defaulted. Banks may have to eat $57 billion of FHA loans as well.
Thus we have a classic government generated fiasco. Housing activists and government regulators try to “protect” consumers by delaying foreclosure through droves of programs like HAMP, HARP and the infamous Attorneys General Settlement (not to mention the Consumer Financial Protection Bureau). Now the regulators and HUD/DOJ are suing lenders and servicers for NOT speeding up foreclosures (see FHA link above).
As I testified in the House of Representatives, I am surprised that any FHA lenders still exist. Throw in DOJ’s theory of disparate outcomes (where lenders can be sued by doing proper underwriting if minorities receive a smaller percentage of loans), and we have a hostile environment for lending.
Throw in declining real household income and increasing taxes, and this is “No Country For Mortgage Lenders.”
no-country-for-old-men
$9 billion in legal expenses?
I see, the “legal expenses” seem to include the massive fines for its mortgage fraud.
Peanuts compared to the trillions in bad mortgage bonds the Federal Reserve bought from these crooks.
I work at SunTrust Capital Investment Bank......we are hemriging $$$$.
I work in derivatives and a desk that I was part of one time is writing down 15 million $ due to a poorly designed hedging model for a sophisticated strategy called a cliquet. Dopes.
The place is infested with affirmative action Atlanta mindset. If you are black, you got a gig for life. There is a black and a woman you oversaw a clearing account. That account was continuously debited $ since 2011....and up until a month ago had a debit of 400 million dollars. Neither one looked at the monthly statement, and the interest it was carrying of 5 million $. Idiots.
So, we are down 20 million due jackasses.
Never mind the business retarding environment of Dodd Frank, we wont recoup those loses for at least a decade.....this is a small regional US bank with. A 20 million dollar lose in one year is worse than a billion dollar loss at JPM.
I also over see a risk management process on Mortgage Back Securities. The system that captures the trades is bad, that the there is unaccounted risk 15-30 million dollars at certain times of the month. The place is a disaster.
I have to find a new job.
The place is infested with affirmative action Atlanta mindset. If you are black, you got a gig for life. There is a black man and a woman whom oversaw a clearing account. That account was continuously debited $ since 2011....and up until a month ago had a debit of 400 million dollars. Neither one looked at the monthly statement, and the interest it was carrying of 5 million $. They were debiting the wrong account! Idiots.
So, we are down 20 million due jackasses.
Never mind the business retarding environment of Dodd Frank, we wont recoup those loses for at least a decade.....this is a small regional US bank. A 20 million dollar lose in one year is worse than a billion dollar loss at JPM.
I also over see a risk management process on Mortgage Back Securities. The system that captures the trades is bad, there is unaccounted risk in the range of15-30 million dollars at certain times of the month. The place is a disaster
I got to find a new job.
Ha—sounds like you’re a sharp guy: you should be able to find a good one.
Not to mention SunTrust wrote mortgages with all the diligence as CountryWide or WaMu ,,, “fund them!!” ,, and 100% of all the mortgages written contained standard language disavowing SunTrust of ownership ,, instead naming MERS as the owner (although they of course never own anything)..
Bunch of brainiacs I tell you...
I’m done. If it wasn’t for a surprise of a lifetime, blood clots in my lungs(found out August 2nd, but today’s CT scan showed they are gone), I was investigating buying into a Race Trac gas station franchise. Dodd Frank is going to erode all business incentives. I need to be self employed at this time in my life(41), there is now way I can survive the PC horsecrap. I would say I work with idiot’s, but that would be insulting to idiots.
I hear ya.
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