Wells Fargo Will Step Back From This Key Industry, Reportedly Conduct LayoffsThe bank announced it will be significantly shifting its focus and taking a step back from the housing market.
On Tuesday,Wells Fargoshared major changes happening to its business in 2023.
该公司announced"strategic plans" to focus on serving bank customers and minority homebuyers. It also intends to descale itsmortgagebusiness — formerly one of the top lenders in the country.
Additionally, the company will exit the correspondent business, which purchasesloansfrom third-party lenders, and reduce the size of its mortgage-servicing portfolio.
"We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus," Kleber Santos, CEO of consumer lending, said in the press release.
Executives have acknowledged that the changes will result in a new round oflayoffs,CNBC reported, but declined to estimate the number of employees who will be affected.
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用新的重点和方向,富国银行的布鲁里溃疡siness model will more closely resemble that of rival banks such as JPMorgan Chase and Bank of America, both of which stepped back from the mortgage business after theGreat Recession of 2008.
The de-escalation ofWells Fargoas a major lender might have implications for themortgage marketin the U.S. When major lenders exit the business, non-banks step in to meet demand. However, these "nonplayers" are far less regulated than banks, CNBC reported.
Related:Choosing the Best Mortgage Lender for You
Currently, Wells Fargo is the third-largest mortgage lender behindRocket Mortgageand United Wholesale Mortgage, both of which are non-bank players.
One of the biggest initiatives in Wells Fargo's new focus is supporting minorityhomebuyers. The bank will invest $100 million in advancingracial equityin homeownership and stated it intends to continue to invest in this sector for years to come.
"As the largest bank lender to Black and Hispanic families for the last decade, we remain deeply committed to advancing racial equity in homeownership," Santos said in the release.
Additionally, Kristy Fercho, head of home lending and head of diverse segments, representation and inclusion at Wells Fargo, stated that the company will hire additional mortgage consultants in communities of color.
The initiative comes months after the bank wasexposedfor falsifying diversity efforts. A former employee claimed Wells Fargo had a practice of holding interviews for positions that were either already filled or didn't exist. The interviews were a vehicle for recordingdiversityefforts on paper rather than carrying them out in reality. Joe Bruno, the former Wells Fargo employee who came forward with the claims, had been fired by the bank in August 2021.
Related:Fake Job Interviews: The Dark Side of Wells Fargo's 'Diversity' Efforts
"To the extent that individual employees are engaging in the behavior as described, we do not tolerate it," a Wells Fargo spokesperson toldThe New York Timesat the time.
