Wells Fargo today announced it will close down all of its wholesale lending operations, as of Friday. The decision comes on the heels of a national fair-lending investigation regarding minority borrowers, following which the company has agreed to pay $125 million to borrowers the Department of Justice believes were impacted.
“While not part of the DOJ settlement, Wells Fargo, on its own volition, also announced today that on July 13 it will discontinue funding mortgages that are originated, priced and sold by independent mortgage brokers through its mortgage Wholesale channel. Mortgages sold by independent brokers in this manner currently represent five percent of the Company’s home mortgage funded volume,” the company stated.
Wells Fargo is unable to price independent loans through its broker channels nor control the loan origination process, the company said. Regarding the settlement, Wells Fargo
“Wells Fargo is settling this matter because we believe it is in the best interest of our team members, customers, communities and investors to avoid a long and costly legal fight, and to instead devote our resources to continuing to contribute to the country’s housing recovery,” said Mike Heid, president of Wells Fargo Home Mortgage.
Previously the largest reverse mortgage lender holding roughly 26% of the market, Wells Fargo decided to shut down its reverse mortgage operations in June 2011. It had previously closed a small reverse mortgage wholesale channel.
“Home values are pretty unpredictable right now, and when you combine that with the restrictions of the HECM program, it’s difficult to determine whether [borrowers] can meet their obligations,” said Greg Gwizdz, EVP/National Sales Manager at Wells Fargo Home Mortgage during an interview with RMD upon the exit announcement.
Written by Elizabeth Ecker