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Wells Fargo considers entering the option-ARM business


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2006 Jun 14, 7:56am   11,254 views  147 comments

by HARM   ➕follow (0)   💰tip   ignore  

future Wells Fargo loan customers

Mortgage slowdown forces Wells Fargo to consider lending options

A few choice excerpts...

Wells Fargo Home Mortgage is looking to less creditworthy borrowers and other niches to boost lending amid an industry slowdown.

"We see a huge opportunity for Wells Fargo to play in that segment in a a very fair and responsible way," Cara Heiden, a co-head of Wells Fargo Home Mortgage, told American Banker.

...Looking to new customer groups to target also helps Wells try to offset the slowdown seen in the mortgage industry as interest rates rise and the pace of home sales declines.

The trade newspaper also said Wells might be considering offering controversial so-called option ARMs, which are adjustable-rate mortgages that give borrowers greater flexibility in repaying the loan but also incurs negative amortization so that the loan balance can actually rise over time.

Heiden told American Banker that option ARMs are an "excellent product" for some borrowers because they offer "wonderful flexibility."

Gee, I don't see *any* problem with Wells entering the NAAVLP biz right at this particular moment, do you?

Let's see: housing affordability in CA now at record lows/close to single digits (hard to say exactly how low, of course, because CAR refuses to release any Housing Affordability Index (HAI) numbers beyond last December). Plus, borrowers already showing signs of stress due to higher rates & option-ARM resets, delinquency & foreclosure activity is on the rise, many sub-prime lenders already laying off staff, etc...

Yup! Looks like a good time to get into the neg-am bid'ness to me!

Discuss, enjoy...
HARM

#housing

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143   Jimbo   2006 Jun 15, 12:30pm  

Sure I made a mistake in translating your numbers. I was in a hurry. Mea Culpa.

144   Jimbo   2006 Jun 15, 12:40pm  

Sorry I can't spend all evening posting here, my wife gets mad which has negative externalities of its own :-)

Nice chatting with you though, in spite of occasional snarkiness. On my side too, I must admit.

145   Different Sean   2006 Jun 15, 6:50pm  

DS says:
whereas FDR got nothing but a cursory ‘thanks’ for entering the war and saving england from the hun (altho he did die inconveniently)…

Uh, England saved itself from the Hun. Then a group of English speakers (American, Canadian, British) pushed the Hun out of France. Of course, this was greatly aided by the Red Army putting pressure on the Hun from the other end of Europe.

well, not really -- england was reeling from the effects of the war, and bombardment and invasion was imminent. churchill was begging FDR to get involved, and isolationist sentiment stopped him from some time. then there was pearl harbour, of course. if germany hadn't overreached, and had stayed just in france and a few other austro-hungarian places like poland, czech territories, etc, it may have regrouped for a subsequent annexation of england. i don't know how long a fascist german european empire would have lasted even if they were successful in invading britain and other places -- it was lucky england had enough foresight to set up a pool of reserves in the north american continent a few hundred years earlier ;)

of course, there were a few self-interested twists in the tale as it developed -- the US hitting Japan hard before the Russians could get there, the general attempt to stop the USSR from taking too many possessions as the next most likely enemy, and so on...

146   Different Sean   2006 Jun 17, 2:04pm  

Where do you think Hitler would have gone after England?

hard to know. you really might have seen a 1984 style world of oceania, eurasia, etc, with russia, the US and some germanic empire the 3 superpowers -- england might genuinely have ended up as 'airstrip one'. there would have been a 3 way arms race. i think there would be some pretty stiff resistance if hitler tried to cross the atlantic and take on the US.

the US at one level wanted to remain neutral and remain isolationist mercantilists and saw it as a 'european war'. and, in retrospect, the devastating effects of total war between evenly matched opponents are so great that it allows a relatively 'peaceful' country like the US to surge ahead economically while the warring countries drive themselves into economic ruin at great loss of life. but that was the european way for centuries, the idiot ideas were deeply ingrained, and at last there has been 60 years of peace (in western europe at least) under modernity.

once again, it's hard to know how long a despotic empire can last ruled by a charismatic leader -- what happens when the leader dies? -- it really started out as a european, french-german war with overtones of millennial movements and imperial ambition. of course hitler got bogged down in the russian winter just like napoleon. and when it all went pear-shaped, he said 'the german people were too weak' to realise his ambitions.

Now you know why the US invaded Iraq. Not the b.s Bush reason to secure Peace of Democracy in the middle east. That’s a crock fed to idiot flag wavers who, now Iraq has turned into a mess, are not waving flags so much.

oh really? i should stop listening to my toby keith CDs then. i haven't posted anything on the PNAC and caspian sea resource ambitions here before, of course ;) i think it's a shame that the last 60 years have seen some increasingly offensive political interference from the US in international politics escalating in this latest rather transparent manoeuvre.

once iraq started going pear-shaped, dubya started talking about nuclear. good thing australia, an ally, has 40% of the world's known uranium resources. maybe that's why halliburton managed to suddenly build a rail link from alice springs to darwin overnight when they had been talking about building one for 100 years without it happening...

147   astrid   2006 Jun 22, 8:09pm  

DS,

I don't think all Chinese goods are crap. There's lots of high quality stuff produced there. It all depends on QC. Apple and many of the major designer labels assemble there. I have an aunt who has a very successful career of managing a major QC testing lab there, so I know good stuff exists, as long as the buyer company puts in the effort.

Walmart stuff, on the other hand, are always crap regardless of place of assembly. The only exception are major brand name goods like Clorox and P&G, who are big enough to resist Walmart's race to the bottom.

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