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Chart: How Wells Fargo Dominates the Mortgage Market

By John Maxfield - Aug 1, 2016 at 1:30PM

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No bank even comes close to rivaling Wells Fargo when it comes to underwriting home loans.

No one does home mortgages like Wells Fargo does. Image source: iStock/Thinkstock.

The banking industry is competitive, with more than 6,000 banks stretched across the country. But while this makes it hard for any one bank to dominate a particular financial product or service, Wells Fargo (WFC 1.92%) sits convincingly atop the U.S. residential mortgage market.

At one point after the financial crisis, Wells Fargo was responsible for upwards of a third of the domestic market for home loans. Its market share has since dropped to 12%, according to the latest estimates from Inside Mortgage Finance, but this decline shouldn't obscure the California-based bank's sizable lead.

The chart below should give you a good sense for this. It shows the mortgage volumes for the five biggest mortgage originators in the first half of 2016. As you can see, Wells Fargo's origination volume is twice that of runner-up JPMorgan Chase, and almost four times that of Bank of America.

Data source: Inside Mortgage Finance. Chart by author.

Wells Fargo has long focused on home loans. Even before the crisis, when the bank's branch network was confined principally to the Western half of the United States, it had mortgage offices spread across the country. When Wells Fargo purchased Wachovia and its sprawling East Coast branch network in 2008, this only added to its competitive strength.

Additionally, unlike many of its peers, Wells Fargo didn't have to retreat and retrench in the wake of the 2008 crisis. Bank of America offers a case in point. For much of the past decade, the North Carolina-based bank has been more concerned with slaying legal liabilities, reining in expenses, and restructuring its operations than with trying to compete with Wells Fargo in the mortgage market.

Consequently, while Bank of America and its legacy companies (namely Countrywide Financial) went into the crisis atop the mortgage industry, it has since emerged as a second-rate player.

JPMorgan Chase passed it, thanks to that bank's crisis-era acquisition of Washington Mutual. Quicken Loans passed it as well, and even the much smaller U.S. Bancorp is closing in on Bank of America. The nation's biggest regional bank by assets originated $26.2 billion in mortgages in the first half of the year, only $3 billion worth less than Bank of America.

In sum, there are many ways to gauge Wells Fargo's success over the years, but its commanding position in the mortgage market is one of the best.

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