Wells Fargo cuts 140 jobs because it exits the correspondent channel

Wells Fargo lower over 100 jobs in its mortgage division this week following its resolution to exit the correspondent channel and shrink its servicing portfolio. 

A Employee Adjustment and Retraining Notification (WARN) filed in Illinois on January 18 outlines the financial institution’s plan to impose layoffs that can have an effect on 140 workers. The workforce discount began on Tuesday on the Wells Fargo Mortgage workplace in Springfield. 

“As we stated in our January 10 press launch, we’re exiting the correspondent lending enterprise. The 140 workers in Springfield are a part of the correspondent workforce,” a spokesperson for Wells Fargo informed HousingWire.

The financial institution didn’t present additional particulars, reminiscent of the workers’ job positions. 

Wells, the highest depository mortgage lender in America, just lately determined to cease buying loans from correspondent lenders. 

This channel, which depends on small originators, is purchase-focused. Nevertheless, it has decrease margins attributable to funds made to a community of small lenders and brings a “reputational danger” when financing giant quantities of loans originated from different companies. 

Wells additionally determined to scale back its mortgage servicing rights (MSRs) ebook. And, thus far, rumors in regards to the financial institution promoting its MSRs have influenced market perceptions. 

“We’re making the choice to proceed to scale back danger within the mortgage enterprise by lowering its measurement and narrowing its focus,” Kleber Santos, CEO of client lending, stated in an announcement. 

Final yr, Wells Fargo’s complete originations declined 47% to $108 billion. It originated $14.6 billion in mortgages within the fourth quarter, down 32% quarter-over-quarter and 70% year-over-year. 

The financial institution’s mortgage servicing rights – carrying worth (period-end)­– decreased by 5%, dropping from $9.8 billion within the third quarter of 2022 to $9.3 billion within the fourth quarter. In contrast with This fall 2021, servicing UPB elevated by 35%. The online servicing revenue rose 16% quarter-over-quarter to $94 million however was down 25% year-over-year.  

The financial institution has imposed a number of layoffs of its mortgage workers, reducing tons of of jobs in December.