by Calculated Risk on 7/26/2007 12:40:00 PM

Click on photo for larger image.

Wells Fargo Closes Nonprime Wholesale Lending Business

Wells Fargo Home Mortgage, a division of Wells Fargo Bank, N.A., said today that it will close its nonprime wholesale lending business, which processes and funds nonprime loans for third-party mortgage brokers. In 2006, this business represented 1.6 percent of Wells Fargo's total residential mortgage loan volume of $397.6 billion

JPMorgan also tightened mortgage lending standards today too. From JPMorgan:

Will require an initial fixed rate for at least five years on adjustable-rate mortgages for non-prime borrowers to reduce payment shock risk

Will employ underwriting guidelines that require borrowers to demonstrate their ability to handle increases in interest rates on non-traditional mortgages

Has tightened credit standards, including making adjustments to acknowledge declining home values in certain markets and reducing the use of high loan-to-value ratios and stated-income products

Will continue to consider borrowers’ required property tax and homeowners’ insurance payments in determining affordability. Chase offers all its borrowers an option to escrow those payments with Chase

Will continue its practice of not offering option ARMs, which can expose borrowers to negative amortization when their monthly payment does not cover interest costs