Wells Fargo to reduce mortgage servicing, exit correspondent business

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Mortgage lenders like Wells Fargo (NYSE:WFC) saw demand for mortgages and refinancing weaken as interest rates climbed and buying homes became costlier.

As a result, the fourth-largest U.S. lender cut thousands of jobs in the mortgage unit across the country last year after an aggressive expansion during the pandemic.

“We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus,” said Kleber Santos, chief executive officer of consumer lending.

The reorganization comes three days before the bank’s fourth-quarter results. Analysts expect Wells Fargo to report a lower profit of 62 cents a share for the three months ended Dec. 31, compared to $1.25 a year ago, according to data from Refinitiv.

The lender also plans to invest an additional $100 million to advance racial equity in home ownership, it said.