Finance & Economy

Real Estate

Strong outlook for 2022: Wells Fargo heads of CRE and Home Lending on the economy, technology, future of office, and more

December 15, 2021

Strong outlook for 2022: Wells Fargo heads of CRE and Home Lending on the economy, technology, future of office, and more

Kara McShane & Kristy Fercho

Wells Fargo Head of Commercial Real Estate and Head of Home Lending

Kara McShane, head of commercial real estate, and Kristy Fercho, head of home lending at Wells Fargo share their economic outlook for 2022.

Kara McShane, head of commercial real estate, and Kristy Fercho, head of home lending at Wells Fargo are the two most influential figures in mortgage finance. They joined us for an in-depth discussion about the economic outlook for 2022, asset classes to watch, technology, the return to office, and much more. 


To begin this episode, Willy welcomes Kara McShane, head of commercial real estate, and Kristy Fercho, head of home lending at Wells Fargo. Kara joined Wells Fargo in 2010 and has held various senior roles within CRE and asset-backed financing. Prior to joining Wells Fargo, she spent seven years at Morgan Stanley. She serves on the board of directors of the Real Estate Roundtable as well as several other industry boards. She received her BA in economics from Duke University and her MBA in finance and management at Columbia University. Kristy is executive vice president and head of Wells Fargo home lending. She has eighteen years of experience in the mortgage industry, most recently serving as president of the mortgage division at Flagstar Bank. Prior to this, she spent fifteen years at Fannie Mae before moving to PepsiCo, where she was director of worldwide corporate human resources. Currently, she leads the Affordable Housing Working Group, serves as chairman of the Mortgage Bankers Association as well as other foundations. 

As the largest lender of commercial real estate in the United States, Kara shares her and Wells Fargo’s outlook for commercial real estate in 2022 and beyond. Due to global low rates, an abundance of debt, equity liquidity, and unprecedented levels of dry powder, Kara maintains a bullish outlook for the year to come. While rates may move, they are still relatively low from a historical perspective. She predicts inflation will remain elevated for some time, rates will be raised next year, and the commercial real estate industry will stay active.  

Mortgage applications are down 10% compared to this time last year. Kristy shares her surprise to have observed the market dynamics remaining steady despite the backdrop of broader economic volatility. The forecast Kristy and her team are looking at indicates that refinancings will taper off and purchases will remain the same or slightly increase. Though the market will be smaller than what we’ve been seeing, it will remain robust. She explains that Wells Fargo helped over one million customers go into the CARES Act forbearance before its expiration in September. Many customers requested forbearance as a measure of protection but were still able to maintain payments.

Lack of affordable supply is one of the key issues happening in the single-family market right now. This challenge, systemic in nature, is especially pronounced among minority communities. In order to be addressed, it’s important to acknowledge the various barriers. For example, the black homeownership rate is 30 points below white homeownership. Kristy holds a unique vantage point of the industry and although she has never seen such alignment, she understands the issue and wants to take action. Ensuring everyone has access to the same capital is critical to avoid overheating the market. Wells Fargo has been a huge lender of affordable housing in terms of construction of new buildings and maintaining existing ones. Just this year, Kara shares that she and her team have deployed over $8 billion to finance over 28,000 affordable units. The issue extends beyond finances and into incentivizing developers to create and maintain affordable housing units. 

There are many opportunities for capital in 2022 across the board, so it ultimately comes down to what the borrower wants. Kara points out a few advantages and disadvantages of some of the options. She urges borrowers to first determine all of their options and create a list of pros and cons. There is capacity in the current market and any hiccups are likely to be only temporary. However, Kara does worry about work capacity and people’s ability to process all of the business they do have. This will require further technology and innovation moving forward. They have not seen much demand for funding in the hospitality, retail, or office sectors. 

Kristy addresses how Wells Fargo is able to compete with today’s technology-charged institutions like Quicken Loans. Rather than considering them threats or competition, she tends to look at other lenders as opportunities in the industry. A home is most often the single largest asset a person will ever purchase, and most people don’t want to do that online. While Wells Fargo is developing more digital capability, their priority is to combine both people and technology to divide a simple, predictable, and personal experience. It’s a challenge to implement technology for a company as large as Wells Fargo. In closing, Kara and Kristy share their outlooks for the official return to office and in-person networking.  


Connect with Kara McShane and Kristy Fercho
Check out Walter & Dunlop’s website

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