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Perhaps, banks that have been exiting the residential finance space will look really stupid if housing and mortgages recover. Figures released Thursday suggest that delinquencies are falling but a huge overhang of foreclosures is on the way. Corporate earnings are at record levels, employment is rising, and just maybe, maybe housing is on the mend. But a huge stumbling block remains: ultra tight underwriting standards. Heck, even Federal Reserve chairman Ben Bernanke has noticed. But despite these “green shoots” in the market, there is still a possibility that housing has a very long way to go before we can declare “revival” which means that Bank of America's rapid shrinkage in residential finance won't look so dumb after all. But the other side of this coin is Wells Fargo, which continues to grow its mortgage footprint and has an origination market share (according to NMN's Quarterly Data Report) of nearly 30%. In other words, despite the housing depression, Wells has made its bet. The bank believes in mortgages. B of A does not. In the end, who will be proved right?