Bloomberg reports that Wells Fargo & Co. is planning to shrink its vast mortgage empire, which once churned out one of every three home loans in the US…(Bloomberg)
…Wells Fargo’s leadership is preparing a retreat that will probably start with the bank’s ties to outside mortgage firms that generated roughly a third of its $205 billion in new home loans last year, according to people with knowledge of the decision.
Bloomberg notes that Wells Fargo was the lone holdout when giant US banks concluded after the 2008 financial crisis that mortgages are better done in moderation. Now, its executives are sketching plans that would curb new lending and related businesses such as loan servicing. Though plans have yet to be hashed out, senior executives believe the focus will be on lending to people with existing relationships with the bank, or in places where it’s already present.
There were some signs of the shift when Wells Fargo reported Q2 earnings. Inman reported that rising interest rates and a shrinking branch network cut into Wells Fargo’s mortgage business, and bank executives say they’re fine with that as credit card revenues surpassed mortgage revenue.