Top Mortgage Lending Banks Take Big Hit This Week

Concern about the banking industry’s ability to weather the current economic storm dragged down the stock prices of all the country’s top mortgage lenders this week. Even the “healthier” mega-banks of JPMorgan Chase and Wells Fargo watched their share prices dip below $20 this week as investors questioned their ability to manage their large acquisitions of troubled mortgage lending banks in 2008.

The stock prices of the top four mortgage lenders in the country Bank of America, Wells Fargo, JPMorgan Chase and Citigroup showed signs of stabilizing in morning trading today, but still remained at depressed levels. The short-term outlook for bank stocks appears closely tied to the new steps the Obama administration is expected to unveil later this week. Investors are looking for some sign that the U.S. banking industry is not moving towards some sort of nationalization that could dilute  –if not wipe out–  private-sector investments.

Mortgage Market on Wild Roller Coaster Ride This Week

The mortgage market and companies linked to the industry’s well publicized woes found themselves on a wild roller coaster ride this week. Most mortgage-related firms saw their stock prices fall dramatically on Monday in the wake of news that investment bank Bear Stearns was being sold off at a fire-sale price of just $2 a share.

But then the combination of another hefty cut in the Fed’s interest rates and news that regulators would be loosening Fannie Mae’s and Freddie Mac’s capital requirements, sent mortgage stocks soaring upwards on Tuesday. Countrywide, Fannie Mae and Freddie Mac saw their per share stock prices jump 25 percent or more on Tuesday. And those mortgage-related stock gains continued in early trading on Wednesday even though the Dow Jones Industrial Average was down.