In
January
2023,
Wells
Fargo
announced
the
decision
to
exit
the

correspondent
business,
and
originations
through
the
channel
declined
to
$1.1
billion
for
the
year
from
$44
billion
in
2022.
But
the
retail
channel
also
declined
–
to
$24
billion
in
2023
from
$64
billion
the
previous
year
–
due
in
large
part
to
higher
rates. 

Wells
Fargo’s
CEO
Charlie
Scharf
said
in
a
statement
that
the
company
started
last
year
to
see
improvements
in
parts
of
the
business
that
executives
believe
will
drive
higher
returns
over
time,
for
example,
credit
card
products,
corporate
banking,
and
investment
banking. 

Regarding
the
mortgage
business,
Scharf
added
that
“continued
execution
of
our
more
focused
home
lending
strategy
should
also
produce
higher
returns
and
earnings
over
the
next
several
years.” 

But
not
yet.
Earnings
in
the
mortgage
business
are
declining
year
over
year
at
Wells
Fargo.
The
noninterest
income
with
mortgages
came
in
at
$829
billion
in
2023,
compared
to
$1.3
billion
in
2022,
a
40%
decline.
Home
lending
revenues
declined
to
$3.3
billion
from
$4.2
billion
in
the
same
period.

Amid
the
contraction
at
Wells
Fargo,
JPMorgan
became
bigger
than
its
rival
in
the
mortgage
space.
One
push
was
made
by
acquiring
the
jumbo
leader

First
Republic
Bank
after
federal
regulators
seized
it. 

JPMorgan’s
total
production
was
$35
billion
in
2023
–
38%
higher
than
Wells
Fargo’s
origination
volume.
But
JPMorgan
Chase
declined
46%
from
$65
billion
in
2022.
Originations
through
the
correspondent
channel
fell
53%
year
over
year
at
JPMorgan
to
$12.7
billion
in
2023.
Meanwhile,
volumes
declined
42%
year
over
year
in
the
retail
branches
to
$22.4
billion. 

In
2023,
the
bank’s
net
revenues
with
home
lending
came
in
at
$4.1
billion,
up
13%
compared
to
the
previous
year. 

Meanwhile,
smaller
competitor
BofA
delivered
a
$19.4
billion
production
in
residential
mortgages
in
2023,
compared
to
$44.7
billion
the
previous
year,
a
56%
decline.
The
business
grew
to
$9.8
billion
in
the
home
equity
space
from
$9.6
billion
in
the
same
period. 

Bank
of
America’s
total
mortgage-backed
securities
reached
a
$51.2
billion
fair
value
as
of
Dec.
30,
compared
to
$29.3
billion
as
of
Sept.
30,
2023.  

How
was
the
last
quarter
of
the
year?

At
Wells
Fargo,
mortgage
originations
reached
$4.5
billion
from
October
to
December,
down
30%
quarter
over
quarter
and
70%
year
over
year. 

As
the
bank
completed
its
exit
from
the
correspondent
channel
in
Q3,
all
the
volume
in
the
fourth
quarter
came
from
its
branches,
mainly
focused
on
purchase
loans.
Ultimately,
refinancing
comprised
24%
of
the
volume
in
Q4,
compared
to
16%
in
the
previous
quarter. 

In
financial
terms,
the
revenue
related
to
the
home
lending
business
remained
flat
compared
to
the
previous
quarter
at
about
$840
million
in
Q4.
Compared
to
the
same
quarter
in
2022,
when
revenue
was
$786
million,
it
increased
7%.
However,
mortgage
banking
noninterest
income
at
Wells
came
in
at
$202
million
in
Q4
2023,
a
decrease
from
$193
million
in
the
previous
quarter
and
a
substantial
increase
from
$79
million
in
the
same
period
of
2022.

Meanwhile,
at
JPMorgan,
origination
volume
totaled
$7.2
billion
in
Q4,
including
$410
million
from
First
Republic
Bank,
which
was
focused
almost
entirely
on
jumbo
loans. 

Including
First
Republic
Bank’s
production,
JPMorgan’s
mortgage
volume
declined
by
35%
compared
to
Q3
2023.
Still,
it
increased
by
7%
compared
to
the
same
period
the
previous
year
(when
First
Republic
was
not
part
of
JP’s
operations).  

Through
its
correspondent
channel,
origination
volume
reached
$2.5
billion
in
Q4,
a
decline
of
40%
quarter
over
quarter.
Retail
volume
reached
$4.7
billion,
down
31%
in
the
same
period. 

JPMorgan’s
home
lending
net
revenue
reached
$1.16
billion
in
Q4,
down
7%
from
the
prior
quarter
and
up
99%
year
over
year
–
excluding
the
acquisition
of
First
Republic,
the
increase
year
over
year
is
39%.  

According
to
the
bank,
the
performance
was
“driven
by
higher
servicing
revenue,
largely
due
to
the
absence
of
a
net
MSR
loss
in
the
current
quarter
compared
with
the
prior
year,
as
well
as
higher
net
interest
income.” 

BofA’s
mortgage
originations
totaled
$3.9
billion
during
the
fourth
quarter
of
2023,
a
30%
decline
from
$5.6
billion
posted
in
the

third
quarter
and
a
25%
drop
from
the
$5.2
billion
originated
in
the
fourth
quarter
of
2022. 

BofA
also
originated
$2.25
billion
in
home
equity
loans
in
the
fourth
quarter,
which
was
lower
than
the
$2.42
billion
volume
in
the
previous
quarter
and
$2.6
billion
in
the
same
period
last
year. 

The
servicing
side
of
the
business 

On
the
servicing
side,
Wells
Fargo’s
mortgage
servicing
rights
–
carrying
value
(period-end)­
–
declined
by
12%,
to
$7.5
billion
in
Q4
from
$8.5
billion
in
Q3.
Compared
to
Q4
2022,
servicing
UPB
decreased
by
20%. 

The
bank’s
net
servicing
income
came
in
at
$113
million
from
October
to
December,
compared
to
$41
million
in
the
previous
quarter
and
$94
million
in
the
same
period
of
2022.
In
2023,
however,
it
declined
18%
to
$300
million. 

JPMorgan’s
mortgage
servicing
rights
increased
to
$8.5
billion
in
Q4
2023,
down
from
$9.1
billion
in
Q3
2023
but
up
from
$7.9
billion
in
Q4
2022. 

Mortgage
servicing
revenues
at
JPMorgan
declined
to
$179
million
in
Q4
2023
from
$255
million
in
Q3
2023.
In
Q4
2022,
such
revenues
came
in
at
$47
million.
In
2023,
net
mortgage
servicing
revenues
totaled
$754
million,
up
2%
year
over
year. 

What
to
expect
in
the
coming
quarters

Overall,
Wells
Fargo
delivered
a
$3.4
billion
profit
in
Q4
2023,
compared
to
$3.1
billion
in
the
same
quarter
of
2022.
Overall
revenues
came
in
at
$20.5
billion
from
October
to
December,
up
from
$20
billion
in
the
same
period
last
year. 

Regarding
the
macroeconomic
landscape,
Scharf
said
in
a
statement
that
the
bank
is
“closely
monitoring
credit,
and
while
we
see
modest
deterioration,
it
remains
consistent
with
our
expectations.” 

“Our
capital
position
remains
strong,
and
returning
excess
capital
to
shareholders
remains
a
priority,”
Scharf
said. 

At
JPMorgan,
net
income
came
in
at
$9.3
billion
in
the
fourth
quarter
(including
First
Republic
operations),
lower
than
the
$13
billion
in
the
previous
quarter
and
the
$11
billion
in
the
same
quarter
of
2022.
The
bank
said
that
excluding
the
FDIC
special
assessment
and
discretionary
securities
losses,
net
income
would
be
$12.1
billion. 

Jamie
Dimon,
the
bank’s
chairman
and
CEO,
said
2023
was
a
“good
example”
of
the
power
of
the
bank’s
investment
philosophy
and
fortress
principles.
But
there
are
challenges
ahead. 

According
to
Dimon,
despite
a
resilient
U.S.
economy
and
an
expected
soft
landing
by
the
markets,
increasing
government
spending
–
due
to
past
stimulus,
the
need
to
invest
in
the
green
economy
and
higher
military
spending,
among
others
–
may
lead
inflation
to
be
stickier
and
rates
to
be
higher
than
markets
expect.   

On
the
regulatory
front,
specifically

Basel
III
endgame,
Dimon
believes
it
“could
cause
serious
harm
to
consumers,
businesses,
and
markets”
and
hopes
“regulators
will
make
the
necessary
adjustments.” 

At
Bank
of
America,
net
income
came
in
at
$3.1
billion
in
Q4,
compared
to
$7.8
billion
in
Q3
and
$7.1
billion
in
Q4
2022. 

Chair
and
CEO
Brian
Moynihan
said
it
was
a
“solid”
performance.
“All
our
businesses
achieved
strong
organic
growth,
with
record
client
activity
and
digital
engagement,”
Moynihan
said
in
a
statement.