Wells Fargo, once the No. 1 player in mortgage lending, announced it is taking a step back from its previous goal of reaching more Americans. Instead, it will now focus on home loans for existing bank and wealth management customers — and borrowers in minority communities.
The financial services company highlighted its plans to leave the “correspondent business with plans to reduce the size of its servicing portfolio”. The bank will focus its home lending business on “individuals and families in minority communities”.
“We are making the decision to reduce risk in the mortgage business by reducing its size and narrowing its focus,” Kleber Santos, CEO of Consumer Lending, said in a press release.
Specifically, the bank said it was going to:
- Expand your retail team by focusing on existing bank customers and underserved communities.
- Invest an additional $100 million to “advance racial equity in home ownership.”
- Deploying additional home mortgage counselors to local minority communities.
“We will continue to expand our programs by leveraging our strong partnerships with the National Urban League, Unidos US and other non-profit organizations to reach more customers in under-served communities,” said Christy Fercho, Head of Home Lending and Added Head of the Diversified Segment, Representation and Inclusion at Wells Fargo. “We will also hire additional mortgage advisors in communities of color.”
The press release highlights that $150 million will also be used to refinance or buy homes in minority communities, “helping more Black and Hispanic families achieve homeownership.”
These changes have been implemented as the lending market has collapsed as the Federal Reserve continues to raise rates to combat inflation – calling into question the long-term profitability of consumer loans.
Wells Fargo also investigated it in 2016 fake accounts scamWhen he opened at least 3.5 million fraudulent accounts for unknowing customers.
“We are fully aware of the history of Wells Fargo since 2016 and the work we need to do to restore public trust in us,” said Kleber Santos, consumer lending chief. cnbc, “As part of that review, we determined that our home-lending business was too large both in terms of its overall size and its scope.”
When The Post contacted for clarification on where the reduction in the mortgage lending space would occur and who exactly would be negatively affected, Wells Fargo declined to comment any further.