Wells Fargo is already the top bank when it comes to issuing home mortgages, but it wants an even bigger part of the pie.
Wells Fargo issued about 34 percent of all home mortgages and 13 percent of mortgages for purchases in the first quarter. Thatâ€™s more than triple the number of its closest rival, JPMorgan Chase, and marks a record for the lender in highest market share for all mortgages, including new home purchases and refinancings.
The company reportedly is encouraging its loan officers to issue even more loans to home buyers.
In a conference in mid-January, sales managers with the bank reportedly dressed as cowboys touting the slogan â€œ40% or BUST!â€ to encourage loan officers to lend more for new-home purchases to reach the goal of 40 percent of the market share. Since news of the motivational rally leaked to the press, company leaders are quick to say they arenâ€™t concerned about market share or and don't have a specific market share goal with lending.
In some markets, reports are surfacing of loan officers being enticed to lend more with company offers of prize drawings for whomever files more loan applications and meets with more real estate agents.
But is the lenderâ€™s increased market share coming at a price? Financial analysts say it doesnâ€™t appear that Wells Fargo is dropping its underwriting standards in order to achieve a larger share of the mortgage business. Instead, financial analysts say the company is able to take a bigger share due to a retreat from rival banks in the mortgage business.
Still, Wells Fargoâ€™s increasing volume in the mortgage business has some regulators concerned that they are getting too big.
â€œWe have seen a great deal of concentration in mortgage origination and in mortgage servicing in recent years,â€ Edward J. DeMarco, acting director of the Federal Housing Finance Agency, said in a speech on May 15 in Washington, D.C. â€œPolicy makers need to think hard about where and how regulatory requirements contribute to this growing concentration in the marketplace, and what might be done to reverse this.â€
Source: â€œWells Fargo Bankers Toting Guns Aim at 40% of Market: Mortgages,â€ Bloomberg (June 12, 2012)