November 2012

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THE LATEST ORIGINATION Wells Fargo Ramps Up Legislative Lobbying New findings indicate that the financial institution continues to significantly increase funding for lobbying efforts. W past several years. After spend- ing just $620,000 on lobbying in 2002, a decade later the bank's spending is in the millions, ac- cording to data from the Center for Responsive Politics. Last year, Wells Fargo spent ells Fargo has been ramping up its lobbying activities over the procurement lobbying laws over the past few years, and Wells Fargo strives to comply with applicable laws and regulations," a Wells Fargo spokesman told the Observer. However, according to the "There's been an increase in nearly $8 million on government lobbying. This year, the bank has invested a total of about $3.8 million in lobbying, according to the Center. Not only has the bank in- Observer, Wells Fargo "has put legislative lobbyists in state capi- tals where none had been before" in at least 11 states. Wells Fargo's actions are not creased its spending, but it has also increased its number of lobbyists registered in various states. This year, 150 lobbyists are working in 31 state capitals on behalf of Wells Fargo, according to research by a Charlotte Observer reporter. Five years ago, the bank recorded 47 lobbyists working in 10 states, according to the Observer. Wells Fargo attributes the increase in its number of reg- istered lobbyists to changing rules regarding government contracts. In many states, individuals vying for government contracts are required to register as lobbyists, even though they may not be at- tempting to sway regulation. all that surprising, according to the Center for Responsive Politics, which notes on its site that "a special interest's lobbying activity may go up or down over time, depending on how much attention the federal government is giving their issues." With banking—and housing finance in particular—facing increased scrutiny from the gov- ernment, it might seem natural Wells is ramping up its lobbying. Housing followed finance as the second-most lobbied issue by Wells this year. In fact, the Housing Finance Reform Act of 2011 continues to be one of the top lobbied bills by the bank: Wells mentioned the bill in four issues reports throughout 2011, making the bank one of the more active clients for that piece of legislation. Generate Equity Boost The nation's latest Housing Scorecard showed that home equity has improved to levels last seen in 2008. Rising Home Values R ising home values in September brought homeowner equity to its highest level since the third quarter of 2008, according to the Obama administration's latest Housing Scorecard. The scorecard was a little more positive than it has been in recent months, though officials continued to caution that the overall recovery is still fragile. According to the report, homeowner equity increased $406 billion, or 5.9 percent, to $7.3 trillion in the second quarter of 2012. After experiencing a turnaround into growth in the year's first quarter, total equity has grown $863 billion, or 13.5 percent, since the end of 2011. Increases in both new and Amount Wells Fargo spent on government lobbying in 2002. spent on government lobbying in 2011. Amount Wells Fargo existing home sales added to the good news, as did continuing upward trends in home prices. Analysts in 2009 project a severe downturn in prices followed by several years of slow, steady pickup into 2014, but the scorecard revealed much larger, quicker—albeit not as steady— price gains. "As the September Housing Scorecard indicates, our housing market is showing important signs of recovery, with homeowner equity at a four-year high and summer sales of existing homes at the strongest pace in two years," said Erika Poethig, acting assistant secretary at HUD. "The administration's efforts to keep housing affordable and refinances strong are critical with so many households still struggling to make ends meet." Mortgage originations also showed some gains in the second quarter, with refinance originations showing a nearly 480,000 year-over-year increase to 1.35 million. Purchase originations lost some footing year-over-year, falling 44,000 to 497,800. Delinquency rates fell month-over-month and year- over-year across the board, with prime and subprime mortgages posting delinquencies of 3.8 percent and 29 percent, respectively. FHA mortgages also improved performance- wise, falling to 11.7 percent delinquency despite a month- to-month increase in seriously delinquent mortgages. THE M REPORT | 39 ORIGINATION SERVICING ANALYTICS SECONDARY MARKET

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