Wells Fargo announced plans to exit the correspondent lending business and shrink its home mortgage servicing portfolio, narrowing its focus to bank customers and those in minority communities. The move continues work the company has done over the past three years to “simplify this business,” Wells Fargo said in a statement.
“Mortgage is an important relationship product, and our goal is to continue to be the primary mortgage lender to Wells Fargo bank customers as well as minority homebuyers. We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus,” said Wells Fargo Consumer Lending CEO Kleber Santos said. “As the largest bank lender to Black and Hispanic families for the last decade, we remain deeply committed to advancing racial equity in homeownership.”
Plans include “optimizing the retail team to focus primarily on bank customers and underserved communities,” broadening the company’s $150 million investment from its Special Purpose Credit Program to include purchase loans, investing $100 million to “advance racial equity in homeownership,” and adding home mortgage consultants to local minority communities.
“We will continue to expand our programs to reach more customers in underserved communities by leveraging our strong partnerships with the National Urban League, UnidosUS and other non-profit organizations,” Kristy Fercho, head of Home Lending and head of Diverse Segments, Representation and Inclusion, said. “We also will hire additional mortgage consultants in communities of color.”
The move follows the Consumer Financial Protection Bureau ordering Wells Fargo to pay an historic $3.7 billion fine in December 2022 relating to consumer abuses tied to mortgages, auto loans, and overdraft fees.
Ranking member of the House Financial Services Committee Maxine Waters (D-Calif.) called this announcement proof that Wells Fargo was “too big to manage.”
“After a string of abusive practices, years of breaking the law, and another public enforcement action announced by the CFPB last month, I am not surprised that Wells Fargo has finally come to the conclusion that I arrived at long ago: Wells Fargo is too big to manage and as a result, incapable of complying with the law,” said Waters in a press release.
“For years, repeat offenders like Wells Fargo have broken the law but see fines as just another 'cost of doing business' while they rake in billions in profits,” Waters added. “After I highlighted existing tools regulators had at their disposal beyond fines to escalate penalties against repeat offenders, the Fed imposed an asset cap in 2018 and the Office of the Comptroller of the Currency (OCC) imposed restrictions on the bank’s mortgage servicing operations in 2021. Similarly, I was pleased when Director Chopra urged banking regulators last month to work with him to consider imposing additional limitations on the bank beyond the fines already paid and the limitations the Fed and OCC have imposed on Wells Fargo to date. These escalating penalties do have an impact, as we’ve seen with Wells Fargo’s announcement to downsize its activities. I continue to urge regulators to use the full extent of their authorities to hold all repeat offenders accountable for harming consumers.”