The company aims to widen the existing $150m investment from its Special Purpose Credit Program (SPCP) to include purchase loans and invest an additional $100m to promote racial equity in homeownership
Facade of a Wells Fargo bank branch. (Credit: Wells Fargo)
US-based financial services company Wells Fargo has unveiled its plans to reduce the size of its mortgage servicing portfolio and exit the correspondent business.
The company aims to create a more focused home lending business that intends to serve bank customers, along with individuals and families in minority communities.
Wells Fargo said that the plans will continue the work it has advanced over the past three years to simplify the business.
Demand for mortgages and refinancing has been declining with the rise in interest rates in the US, making home purchases more expensive, reported Reuters.
Wells Fargo decided to cut thousands of jobs in its mortgage unit across the country last year, due to the slump in the mortgage lending space, said the publication.
Wells Fargo Consumer Lending CEO Kleber Santos said: “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.
“We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus.
“As the largest bank lender to Black and Hispanic families for the last decade, we remain deeply committed to advancing racial equity in homeownership.”
In addition to exiting the correspondent business and reducing its servicing portfolio, Wells Fargo will focus on bank customers and underserved communities.
The company aims to widen the existing $150m investment from its Special Purpose Credit Program (SPCP) to include purchase loans.
It aims to invest an additional $100m to promote racial equity in homeownership, including strategic partnerships with non-profit organisations and community-focused engagements.
Wells Fargo said that the strategic decision on the home lending business will replace the minority homeownership lending commitments made in 2016 and 2017.
The Special Purpose Credit Program is initially focused on lowering rates for customers refinancing will now broaden to include purchase loans.
In addition, the $150m investment is expected to reduce the costs for individuals in underserved communities, to refinance or buy a home, said the company.