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Wells Fargo considers entering the option-ARM business


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2006 Jun 14, 7:56am   11,163 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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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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