Wells Fargo Correspondent cut more than a hundred jobs in its mortgage division this week following its decision to exit the channel and reduce its servicing portfolio.
An Employee Adjustment and Retraining Notification (WARN) filed Jan. 18 in Illinois outlines the bank’s plan to implement layoffs that will affect 140 employees. Workforce reductions began Tuesday at a Wells Fargo mortgage office in Springfield.
“As we stated in our January 10 press release, we are exiting the correspondent lending business. 140 employees are part of the correspondent team in Springfield,” a Wells Fargo spokesperson told HousingWire.
The bank did not provide further details, such as the job status of the employees.
Wells, the top depository mortgage lender in the US, recently decided to stop buying loans from correspondent lenders.
This channel, which depends on small promoters, is buy-oriented. However, it has low margins due to payments made to a network of smaller lenders and carries a “reputational risk” when funding large amounts of loans originated from other firms.
Wells also decided to reduce its mortgage servicing rights (MSRs) book. And, so far, rumors of the bank selling its MSRs have influenced market sentiments.
“We are making the decision to reduce risk by reducing the size of the mortgage business and narrowing the focus,” Kleber Santos, CEO of Consumer Lending, said in a statement.
Last year, Wells Fargo’s total originations dropped 47% to $108 billion. It originated $14.6 billion in loans in the fourth quarter, down 32% quarter-over-quarter and 70% year-over-year.
The bank’s mortgage servicing rights – carrying value (period-end) – decreased 5%, from $9.8 billion in Q3 2022 to $9.3 billion in Q4 2022. Compared to Q4 2021, UPB servicing grew by 35%. Net servicing income increased 16% quarter-over-quarter to $94 million, but was down 25% year-over-year.
The bank has made several layoffs of its mortgage employees, cutting hundreds of jobs in December.
