A Wells Fargo bank location in Philadelphia, Nov. 29, 2018. (AP Photo/Matt Rourke)
Wells Fargo, historically the bank most reliant on mortgages of the six largest U.S. banks, is expected to thin its ranks of mortgage loan officers from more than 4,000 to less than 2,000 at the beginning of 2023.
The bank said in October that its total workforce shrank by 6 percent in the third quarter — down about 14,000 people to 239,209 employees, CNBC reported.
The largest mortgage loan originator in the U.S., Wells Fargo has a 15 percent-plus share of the market, according to Relbanks.com.
The bank had about 18,000 loans in its retail origination pipeline in the early weeks of October, according to people with knowledge of the company’s figures. That’s as much as 90 percent less than a year earlier when the housing market was booming, fueled by the covid pandemic.
Mortgage bankers mainly earn commissions when they close deals. Many salespeople haven’t closed a loan in recent weeks, but most of the exits have been voluntary as bankers sought other opportunities, sources said.
The bank began cutting employee numbers in April and internal projections point to more departures, according to CNBC. In early September, Wells Fargo cut about 75 employees in its home mortgage division. Later in the month, it announced plans to lay off 36 employees, bringing the bank’s total layoffs since April to more than 400, Iowa CBS affiliate KCCI reported. In October, the bank told investors that mortgage originations had fallen almost 60 percent in the third quarter and the housing market could cool further.
CEO Charlie Scharf has said that Wells Fargo wants to shrink the mortgage business and focus mainly on serving existing customers.
The U.S. housing market is in decline after being on a rollercoaster since the outbreak of covid-19. Low interest rates and a switch to working from home helped push up demand for homes. The Federal Reserve’s multiple recent interest rate hikes to fight inflation have helped send the market into decline.
As of Nov. 4, the national average rate for the benchmark 30-year fixed mortgage is 7.32 percent, up 15 basis points over the last week, according to Bankrate.com. Refinancing an existing mortgage on a 30-year fixed refinance is 7.3 percent.
“We expect it to remain challenging in the near term,” Wells Fargo Chief Financial Officer Mike Santomassimo told analysts on Oct. 14. “It’s possible that we have a further decline in mortgage banking revenue in the Q4 when originations are seasonally slower.”
Changes at Wells Fargo “are the result of the broader rate environment and consistent with the response of other lenders in the industry,” a Wells Fargo spokesman said in a statement.
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