Wells Fargo is gearing up to originate more mortgages that do not follow new regulatory guidelines that were enacted to discourage banks from bundling up risky loans and selling them to investors, Bloomberg reports.
According to Bloomberg, the bank is training a team of about 400 underwriters who will be devoted to making loans that the bank will hold on its books as opposed to selling them to investors like Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).
Bloomberg reports that as many as 40 percent of the loans originated by the unit are not expected to meet the guidelines of the new “qualified mortgage” rule.
Brad Blackwell, head of portfolio lending for Wells Fargo, says “nonqualified” mortgages could grow to account for about 5 percent of the bank’s total mortgage production. Source: Bloomberg.