Wells Fargo is reading the tea leaves and preparing to scale back its mortgage division. The country’s largest depository mortgage lender by volume is planning for a smaller footprint in correspondent lending and third-party servicing business.
According to MarketWatch, a bank spokesman said in an e-mail statement that Wells Fargo is weighing its mortgage unit “like others in the industry” as part of a continuing effort to “prioritize and best position us to serve our customers broadly.” The bank’s third-party servicing business is expected to shrink as well, including the servicing of FHA loans.
The move comes as layoffs continue to impact the mortgage industry, as we’ve closely been following over the past handful of month.
Wells Fargo’s share of the market has dropped from 2.73 percent in 2015 to 1.92 percent in 2022, according to Federal Reserve. Additionally, home lending revenue fell 53 percent in the bank’s second quarter from one year ago, driven by lower mortgage originations and compressed margins in the face of higher interest rates
Compared to Q1 of this year, mortgage originations fell 10 percent last quarter.