Wells Fargo (WFC) CEO John Stumpf warned the government-sponsored enterprises that they must stop being so quick to accuse banks of faulty underwriting and then forcing them to repurchase soured loans, according to an article from the Financial Times. (This article is behind a paywall)
“We’re just not going to make those loans and there’s going to be a whole bunch of Americans that are underserved in the mortgage market,” Stumpf said.
“If somebody makes a payment for – let’s say – three years, the risk ought to transfer then to the insurance company … If you’re going to pick through each one looking for a technical fault not to pay your insurance policy we’re not going to be in that business,” he added.
Meanwhile, Wells Fargo is working in overdrive to combat the industry-wide plummet in mortgage volume, easing its standards on jumbo loans and lowering its FICO requirement on Federal Housing Administration-backed mortgage loans.