Wells Fargo Says Goodbye to Brokers, Shuts Down Wholesale Lending

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

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  • Among the considerations Wells had in staying in our industry were two very key issues.  The first was how to justify staying in an ever shrinking market and the second was how to mitigate potential losses from property charge defaults and avoid foreclosure headline risk.  Wells clearly showed no faith in the ability of counselors or their own servicing team to be able to mitigate losses from defaults and was very disturbed by the seeming irresponsible lack of action from HUD.

    MetLife now has left the industry over undisclosed reasons but no doubt included among them are the same two:  a shrinking market and growing potential liabilities combined with foreclosure headline risk.

    Will another major lender leave in the next 12 months or will the home appreciation rate nationally show such recovery that the industry will once again remain stable for a period of time?  

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