Wells Fargo is drastically shrinking its home loan business after a series of scandals and a record fine from the Consumer Financial Protection Agency (CFPB).
Going forward, the bank said it would focus primarily on lending to existing customers and minority borrowers, and would no longer work with outside intermediaries who arrange loans on the bank’s behalf. The practice, known as correspondent banking, accounts for nearly half of their mortgage originations.
Wells Fargo also said it would reduce the size of its service book – the loans where it collects payments and collects fees for doing so.
Wells Fargo’s competitors decided, after the last financial crisis, to scale back their mortgage business, ceding market share to non-bank mortgage companies after they paid billions of dollars in penalties. Wells Fargo took a different approach, remaining the nation’s largest mortgage lender for years.
Source: CNN Brasil
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