Wells Hits $1.5T MSR Threshold.

San Francisco -- For all the bad news affecting the mortgage business, the biggest home loan servicers continue to grow their portfolios, demonstrating long-term confidence in the business.

Wells Fargo owned servicing rights on $1.53 trillion in home loans at the end of 2007, up 12% from the prior year, the company said in its fourth-quarter earnings report. That makes Wells Fargo the first lender to officially cross the $1.5 trillion mark.

Countrywide Financial Corp., which has entered a deal to be acquired by Bank of America, serviced $1.48 trillion at the end of the year.

(See related story, page 27.)

In a recorded conference call for investors, Wells Fargo's chief financial officer, Bob Strickland, said that growth in the servicing portfolio contributed to a 36% increase in non-interest income from the mortgage banking unit.

"The 73% fourth-quarter year-over-year increase in net servicing fee income more than offset the 28% decline in net gains on mortgage loan/sales activities," he said.

Like other lenders, Wells Fargo saw higher credit costs in the fourth quarter. Wells Fargo said that consumer real estate portfolios contributed almost half of the $1.2 billion in net charge-offs companywide during the quarter.