Wells Fargo in San Francisco plans to exit correspondent lending and reduce the size of its servicing portfolio.
The $1.9 trillion-asset company said in a press release that it will shift its focus, including plans to broaden its Special Purpose Credit Program, a $150 million investment to refinance loans to minority homeowners, to include purchase loans.
Wells also plans to invest another $100 million to “advance racial equity in homeownership,” including strategic partnerships with nonprofits and community-focused engagements.
“Mortgage is an important relationship product, and our goal is to continue to be the primary mortgage lender to Wells Fargo bank customers as well as minority homebuyers,” Kleber Santos, the company’s CEO of consumer lending, said in the release.
“We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus,” Santos added.
Wells also said it will deploy more home mortgage consultants to local minority communities
“We will continue to expand our programs to reach more customers in underserved communities by leveraging our strong partnerships with the National Urban League, UnidosUS and other” nonprofits, Kristy Fercho, head of home lending and head of diverse segments, representation and inclusion, said in the release.
The shift comes at a time when the correspondent channel was already shrinking. The company originations in the first six months of 2022 fell by 6% from a year earlier, to $28.3 billion.
The announcement also comes weeks after the company agreed to pay more than $2 billion in redress to consumers and a $1.7 billion civil penalty to address concerns raised by the Consumer Financial Protection Bureau tied to auto lending, mortgages and deposit accounts.