是不是预示通膨要来了：ZT U.S. Banks Start to Ease on Lending & Wells Fargo

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Wells Fargo edges back into subprime as US mortgage market thaws
WELLS FARGO, INVESTMENT BANKING, PAY OFF, WACHOVIA, TOP 10, STUMPF, WELLS FARGO, P2P, WELLS FARGO & CO, JPMORGAN CHASE AND CO, BUSINESS NEWS
Reuters | Friday, 14 Feb 2014 | 5:32 AM ET
Wells Fargo, the largest U.S. mortgage lender, is tiptoeing back into subprime home loans again.
The bank is looking for opportunities to stem its revenue decline as overall mortgage lending volume plunges. It believes it has worked through enough of its crisis-era mortgage problems, particularly with U.S. home loan agencies, to be comfortable extending credit to some borrowers with higher credit risks.
The small steps from Wells Fargo could amount to a big change for the mortgage market. After the subprime mortgage bust brought the banking system to the brink of collapse in the financial crisis, banks have shied away from making home loans to anyone but the safest of consumers.

Any loosening of credit standards could boost housing demand from borrowers who have been forced to sit out the recovery in home prices in the past couple of years, but could also stoke fears that U.S. lenders will make the same mistakes that had triggered the crisis.
(Read more: This part of Wells Fargo's business is taking off)
So far few other big banks seem poised to follow Wells Fargo's lead, but some smaller companies outside the banking system, such as Citadel Servicing Corp, are already ramping up their subprime lending. To avoid the taint associated with the word "subprime," lenders are calling their loans "another chance mortgages" or "alternative mortgage programs."
And lenders say they are much stricter about the loans than before the crisis, when lending standards were so lax that many borrowers did not have to provide any proof of income. Borrowers must often make high down payments and provide detailed information about income, work histories and bill payments.
Wells Fargo in recent weeks started targeting customers that can meet strict criteria, including demonstrating their ability to repay the loan and having a documented and reasonable explanation for why their credit scores are subprime.
It is looking at customers with credit scores as low as 600. Its prior limit was 640, which is often seen as the cutoff point between prime and subprime borrowers. U.S. credit scores range from 300 to 850.
Lenders remain cautious in part because of financial reform rules. Under the 2010 Dodd-Frank law, mortgage borrowers must meet eight strict criteria including earning enough income and having relatively low debt. If the borrower does not meet those hurdles and later defaults on a mortgage, he or she can sue the lender and argue the loan should never have been made in the first place.
Those kinds of rules have helped build a wall between prime and subprime borrowers. Lenders have been courting consumers who are legally easier to serve, and avoiding those with weaker credit scores and other problems. Subprime borrowers accounted for 0.3 percent of new home loans in October 2013, compared with an average of 29 percent for the 12 months ended February 2004, according to Mark Fleming, the chief economist of CoreLogic.
With Wells Fargo looking at loans to borrowers with weaker credit, "we believe the wall has begun to come down," wrote Paul Miller, a bank analyst at FBR Capital Markets, in a research note.
Lenders have an ample incentive to try reaching further down the credit spectrum now. Rising mortgage rates since the middle of last year are expected to reduce total U.S. mortgage lending in 2014 by 36 percent to $1.12 trillion, the Mortgage Bankers Association forecasts, due to a big drop in refinancings.
(Watch: Wells Fargo CFO:In midst of good housing recovery)
Some subprime lending can help banks, but it may also help the economy. In September 2012, then Federal Reserve Chairman Ben Bernanke said housing had been the missing piston in the U.S. recovery.
A recent report from think tank the Urban Institute and Moody's Analytics argued that a full recovery in the housing market "will only happen if there is stronger demand from first-time homebuyers. And we will not see the demand needed among this group if access to mortgage credit remains as tight as it is today."
Subprime mortgages were at the center of the financial crisis, but many lenders believe that done with proper controls, the risks can be managed and the business can generate big profits.
Making up with the agencies
For Wells Fargo, one of the critical factors in the new strategy was its clearing up of disputes with Fannie Mae and Freddie Mac, said Franklin Codel, Wells Fargo's head of mortgage production in Des Moines, Iowa. The 2013 settlements for $1.3 billion resolved a few battles in a half-decade war between banks and government mortgage agencies over who was responsible for losses from the mortgage crisis.
The bank still has mortgage problems to clear up with the agencies, including a lawsuit linked to the Federal Housing Administration, but Wells Fargo officials believe the worst is over.
Wells Fargo avoided many of the worst loans of the subprime era: It did not offer option adjustable-rate mortgages, for instance. But when it acquired Wachovia in 2008, the bank inherited a $120 billion portfolio of "Pick-A-Pay" mortgages where borrowers could defer payments on their loans. Those loans have suffered big losses.
One of the reasons for banks being so cautious in mortgage lending now is that Freddie Mac, Fannie Mae and the FHA have been pressing lenders to buy back home loans that went bad after the crisis. The agencies guaranteed the loans, and argued that the banks overstated the mortgages' quality, or made mistakes like omitting required documents.
Banks feel that the agencies were using trivial mistakes as a club to pressure banks to buy back loans. But after its settlements, Wells Fargo is more confident about the underwriting flaws the agencies consider material and the quality of the documentation needed to avoid such costly battles.
"As things become clearer and we are more comfortable with our own processes and controls, it gets easier" to extend more credit, Codel said.
Still, Wells Fargo isn't just opening up the spigots. The bank is looking to lend to borrowers with weaker credit, but only if those mortgages can be guaranteed by the FHA, Codel said. Because the loans are backed by the government, Wells Fargo can package them into bonds and sell them to investors. The funding of the loans is a key difference between Wells Fargo and other lenders: the big bank is packaging them into bonds and selling them to investors, but many of the smaller, nonbank lenders are making mortgages known as "nonqualified loans" that they are often holding on their books.
Citadel Servicing Corp, the country's biggest subprime lender, is trying to change that. It plans to package the loans it has made into bonds and sell them to investors.
Citadel has lent money to people with credit scores as low as 490 - though they have to pay interest rates above 10 percent, far above the roughly 4.3 percent that prime borrowers pay now.
A trailer in the park
As conditions ease, borrowers are taking notice. Gary Goldberg, a 63-year-old automotive detailer, was denied loans to buy a house near Rancho Cucamonga, California. Last summer he was forced to move into a trailer park in Las Vegas.
Going from 2,000 square feet to 200 - along with his wife and two German shepherd dogs - was tough. He longed to buy a house. But a post-crash bankruptcy of his detailing business had torched his credit, taking his score from the 800s to the 500s.
"There was no way I was going to get a mortgage," said Goldberg. "No bank would touch me."
(Read more: Wells Fargo bans staff from investing in P2P loans)
But in December, he moved into a 1,000-square-foot one-story home that he paid $205,000 for. His lender, Premiere Mortgage Lending, did not care about his bankruptcy or his subprime credit score. That is because Goldberg had a 30 percent down payment and was willing to pay an 8.9 percent interest rate.
To be sure, credit is still only trickling down to subprime borrowers. Jamie Dimon, chief executive of the second-largest U.S. mortgage lenderJPMorgan Chase & Co, said on a conference call last month that he did not envision a "dramatic expansion" of mortgage credit because of a continued lack of clarity from the government agencies on their repurchase demands.
But smaller, non-bank lenders are making more loans. One such company, ACC Mortgage in Maryland, is offering a "Low Credit Score Debt Consolidation Program" as well as a "Second Chance Purchase Program." Low credit scores don't matter. Neither do bankruptcies, foreclosures or short sales.
"I think that is going to be the wave of the future, basically making non-prime mortgages, carving that out into a profitable niche," said Guy Cecala, publisher of newsletter Inside Mortgage Finance.
"Right now we're at the infant stage."
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U.S. Banks Start to Ease Limits on Lending
Comptroller's Office Says Institutions' Risk Appetite Grows, Along With Economy
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By
Ryan Tracy and
Saabira Chaudhuri
CONNECT
Updated Jan. 30, 2014 7:57 p.m. ET

Big banks are beginning to loosen their tight grip on lending, creating a new opening for consumer and business borrowing that could underpin a brightening economic outlook.
In both the U.S. and Europe, new reports released Thursday show banks are slowly starting to increase their appetite for risk. The U.S. Office of the Comptroller of the Currency said banks relaxed the criteria for businesses and consumers to obtain credit during the 18 months leading up to June 30, 2013, while the European Central Bank said fewer banks in the euro zone were reporting tightened lending standards to nonfinancial businesses in the fourth quarter of 2013.
Fueling the loosening is a rosier economic picture, competition for a limited pool of loans and a sustained low-interest-rate environment that has banks reaching for returns.
The thaw, while at its earliest stages, could buttress the increasingly optimistic 2014 global growth projections. The World Bank predicts global growth of 3.2%, bolstered by stronger recoveries in the U.S. and the euro zone. The Federal Reserve predicts U.S. growth between 2.8% and 3.2%, while the euro zone is expected to grow by 1.1% after two years of contracting.
At the same time, the easing carries risks, including a return to the type of lax underwriting standards that sowed the seeds of the crisis. The comptroller's report said it would still classify most banks' standards as "good or satisfactory" but did strike a cautionary tone. "The more [banks] loan, just naturally there is going to be more risk. It's a matter of how well they can control that risk," said Bob Piepergerdes, the OCC's director for retail credit risk. The OCC has already prodded banks to stop easing up standards on so-called leveraged loans, made to companies with high levels of debt, prompting big banks to step away from some deals.
An upturn in bank lending, if taken too far, could also lead to inflation. The Fed has flooded banks with trillions of dollars in cash in its efforts to boost the economy. In theory, the printing of that money would cause consumer price inflation to take off, but it hasn't, largely because banks haven't aggressively lent out the money. Consumer inflation in 2013 was a percentage point below the Fed's 2% target.
Chief executives from some large U.S. banks have begun signaling they expect loan growth in 2014, though the projection is based more on anecdotal evidence than on empirical data.
John G. Stumpf, CEO of Wells Fargo & Co., said on a Jan. 14 conference call with analysts that he is "hearing more, when I talk with customers, about their interest in building something, adding something, investing in something."
Kelly King, chief executive of BB&T Corp., told analysts two days later, "we really believe that we are at a pivotal point in the economy…admittedly that's substantially intuitive."
U.S. loan growth ground largely to a halt during the financial crisis of 2008 and has remained weak as banks reversed the easy-lending policies that helped inflate the credit bubble. Pushed by regulators to hold more capital and decrease risk, banks began tightening standards for everything from credit cards to auto to real-estate loans.
The comptroller's survey found more banks loosening standards than tightening. The regulator said that in the 18 months leading up to June 30, 2013, its examiners saw more banks offering more attractive loans.
The trend extended to credit-card, auto and large corporate loans but not to residential mortgages and home-equity loans.
Among the changes banks are offering to entice customers: less onerous conditions for corporate borrowers to meet, giving banks fewer tools if a loan gets in trouble, and longer terms for auto loans. "The competitive environment is one of the key factors driving the loosening," said Grant Wilson, the OCC's director for commercial credit risk. Banks, he said, also are chasing earnings and "have a lot of liquidity on their balance sheet. It's more productive in the loan portfolio."
The OCC's findings are consistent with more recent surveys: The Fed's October survey of senior U.S. loan officers found a growing number loosening standards for commercial and industrial loans, often by narrowing the spread between the interest rate on the loan and the cost of funds to the bank.
The ECB's quarterly survey, which covered 133 banks, showed that the net percentage of euro-zone banks reporting higher lending standards to nonfinancial businesses was 2% in the fourth quarter, compared with 5% in the third quarter.
The data come amid signs U.S. loan growth, which has hovered at about 3% since late 2012, is poised to pick up. The Federal Reserve Bank of New York's measurement of U.S. household debt increased slightly in the third quarter of 2013, bucking a generally downward trend since 2008.
And the Fed's measurement of business lending by commercial banks reached roughly $1.6 trillion in December 2013, the highest level since 2008. But data are still mixed: Consumer-credit growth increased at an annual 4.8% rate in November, according to the Fed, the smallest increase since April.
"There has been some melting away of that frigid ice that most applicants had received," said Patrick O'Keefe, director of economic research for the consulting firm CohnReznick. Credit "is not flowing freely, but when [borrowers] call a prospective lender and investor, their calls are now returned."
Small businesses are one area where some bankers see growth potential.
About 64% of small-business owners reported in December they had engaged in capital spending over the previous six months, the highest level since 2005, according to the National Federation of Independent Business.
Stephanie Loud, president of Mountain West Precast, a Brigham City, Utah, industrial contractor, noted a difference when she took out a loan last year to buy a new property that she might not have been able to obtain years earlier. "Banks just stopped lending for a while," said Ms. Loud. "I'm much more optimistic now."
"Small businesses were very hesitant to borrow in the last three years with so much uncertainty around the government, health care and taxes," said Lori Chillingworth, executive vice president of small business at Zions Bancorp. The Salt Lake City lender logged small-business-lending growth of about 10% in 2013 and has said it expects that to increase to 11% for 2014. Ms. Chillingworth said "we expect to be able to hit that target and then some."
—Christopher Lawton contributed to this article.
Write to Ryan Tracy at ryan.tracy@wsj.com

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more money, haha