Wells FargoLargest depository mortgage lender in the US, The correspondent channel on Tuesday issued pink slips to employees in its home lending business following its decision to exit.
Thank you for reading this post, don't forget to subscribe!“I can’t provide any specifics, but we announced strategic plans in January to create a more focused home lending business,” Tom Goyda, senior vice president of consumer lending communications at Wells Fargo, said in an e-mail response.
Goyda said the cuts were part of the company’s efforts to ease the home lending business, which it has worked on over the past three years — and were also in response to a significant reduction in mortgage volumes in the broader market environment.
In January, the top depository mortgage lender announced it would shrink its home lending business by exiting correspondent lending and reducing its mortgage servicing portfolio.
While the correspondent channel has the advantage of relying on the strength of small lenders, the correspondent business has low margins due to payments made to a network of small lenders. It also brings a “reputational risk” when large amounts of debt are acquired from other firms.
Wells Fargo’s correspondent lending business was already in decline. The first nine months of 2022 saw $37 billion in originations in the correspondent lending space, a 27% decrease from the same period in 2021. inside mortgage finance data, ranking as the third largest player in the reporter space.
The bank’s mortgage servicing rights fell 5% to $9.3 billion in the fourth quarter of 2022, down from $9.8 billion in the third quarter, according to its latest earnings release. Net servicing income increased 16% quarter-over-quarter to $94 million, but was down 25% year-over-year.
“We have communicated openly and honestly with affected employees and have provided opportunities for severance, career assistance and other services to assist them,” Goyda said.
The bank plans to retain as many employees as possible and has had success identifying other opportunities and transitioning affected employees to other roles within Wells Fargo, according to the company.
Wells Fargo cut 140 jobs at its Springfield, Illinois mortgage office last month as well as eliminated hundreds of positions in December.
