: Wells Fargo, once a mortgage giant, shrinks home-lending business

by | Jan 11, 2023 | Stock Market

Wells Fargo said late Tuesday it was shrinking its home-mortgage business, aiming to serve its own bank customers as well as people in “minority communities.” Wells Fargo
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also said it was exiting the correspondent business, in which a bank serves as a third-party intermediary in transactions, and that it plans to reduce the size of its loan-servicing portfolio.

The stock edged lower in the extended session after ending the regular trading day down less than 0.1%. “These plans continue the work the company has advanced over the past three years to simplify this business,” Wells Fargo said in a statement. Mortgage is “an important relationship product,” hence the decision to continue to be a lender to Wells Fargo bank customers as well as minority home buyers, Kleber Santos, chief executive of consumer lending, said. “We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus,” Santos said. “As the largest bank lender to Black and Hispanic families for the last decade, we remain deeply committed to advancing racial equity in homeownership.” Wells Fargo was once among the top mortgage lenders in the U.S. Late last month, the Consumer Financial Protection Bureau ordered it to pay $3.7 billion relating to alleged mismanagement of auto loans, mortgages and deposit accounts. The bank did not admit wrongdoing as part of the settlement. Shares of Wells Fargo have lost about 24% in the past 12 months, compared with losses of around 16% for the S&P 500 index.
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