This time around, it's going to focus on branches, though it will continue to originate prime mortgage loans and commercial real estate loans.
There have even been some securitizations of prime-mortgage loans.
Most people know that the meteoric rise of home prices between 2001 and 2006 had to do with sub-prime loans and mortgage-backed securities.
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It is roughly five years since the US housing market bubble started to deflate, helping to tip the economy into recession and exposing the extent of the sub-prime mortgage scandal in which many people took out loans that they had little prospect of repaying.
These patterns contrast sharply with those in the prime-mortgage sector, in which less than 1 percent of loans are seriously delinquent.
Wells Fargo Home Mortgage has traditionally maintained a higher mix of prime conventional and government loans than the overall industry, especially during the credit bubble which helps explain why Wells Fargo rebounded in a relatively better position vs. competitors than before the crisis.
Others allegedly were steered into costly subprime loans, even though they could have qualified for a prime mortgage, the type of loan offered to borrowers with the best credit histories.
What was worse was that all the big investors and bankers on Wall Street were investing in these sub-prime loans, so they would pour huge amounts of money into the mortgage industry -- nobody was really seeing whether these mortgages were ones that people were going to have the salary to sustain.
For one, the U.S. housing bubble imploded after bulge bracket banks could no longer bare the losses associated with mortgage backed securities, and the ultra leverage used to buy sub prime real estate loans.
According to Fannie Mae, the government-sponsored mortgage-lending agency, up to half the people who take out sub-prime loans could qualify for a prime loan, which charges as much as four percentage points less interest, a huge saving over the 30-year life of a mortgage.
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Mortgage-backed securities were used in some cases to mask the risk of default inherent within sub-prime loans, and contributed to the real estate crash and recession.
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