WaFd in Seattle is getting out of mortgage lending.
The $27.7 billion-asset company said in a press release that it recorded a $5.4 million restructuring expense tied to exiting the single-family mortgage lending market. The move, expected to take place between now and June, will save WaFd about $17 million annually.
WaFd will cut about 8% of its workforce as a result of the move.
The company will retail all existing home loans and HELOCs on its books.
“The mortgage market has shifted over the years to the point where now about 70% of all loans are originated by/to the U.S. government in one way, shape, or form,” Brent Beardall, WaFd’s president and CEO, wrote in. LinkedIn post.
“The impact of this is good for homeowners” by lowering rates, eliminating prepay fees, and leading to “more lax underwriting,” Beardall added. “That is bad news for banks like WaFd … because it has made the business or originating mortgages for our portfolio unsustainable.”
Regulatory burden was another factor behind the decision. WaFd Bank recently received a “Needs to Improve” Community Reinvestment Act rating after it was determined that the bank did not make enough loans to low- and moderate-income borrowers and communities.
“We strongly disagree with this rating and plan to appeal this conclusion,” WaFd said in the release.