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Wells Fargo gives glimpse of housing’s future

By Tom Hudson, The Miami Herald –

The housing market has shown some early signs of life. Sales and prices have turned up while the number of homes for sale has dropped. Record-low borrowing rates have brought some buyers back. Homebuilders are scrambling for land in some markets. These are encouraging indications of stability for home values. On Friday, we will hear how the nation’s largest mortgage lender sees the market when Wells Fargo reports its third-quarter financial results.

Wells Fargo makes almost 1 out of every 3 home loans in the U.S. It does close to three times the mortgage business of its nearest competitor. That kind of lending gives it an important view of housing and extends its influence over the availability of credit. The mortgage business at Wells Fargo has been humming along even as bank executives have been less sanguine about the economy. Recently, the bank’s chief financial officer said he did not expect “a real rebound” in the job market.

While Wells Fargo may be writing more home loans and refinancing more mortgages, it also faces an emboldened Fannie Mae and Freddie Mac, the government giants standing behind most loans. Fannie and Freddie have stepped up their efforts to have banks buy back billion of dollars of mortgages gone bad. That has led to banks socking away money to cover such put-backs. Critics complain it also has forced banks to ratchet up lending standards to nearly impossible levels.

Thanks to its size, Wells Fargo is a window into the health of housing as well as the willingness of banks to lend.

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