Executives hope to reduce risk by reducing the size and narrowing the focus of bank’s mortgage business to better serve retail customers and minority communities.

New markets require new approaches and tactics. Experts and industry leaders take the stage at Inman Connect New York in January to help navigate the market shift — and prepare for the next one. Meet the moment and join us. Register here.

Wells Fargo, once the nation’s leading provider of home loans, announced Tuesday it will no longer buy mortgages from correspondent lenders as part of a strategy to better serve the bank’s customers and minority communities.

Correspondent lenders are typically smaller institutions who originate and fund their own loans, then resell them to other lenders or investors. Bloomberg reported in August that Wells Fargo was eyeing a “major retreat” from mortgage lending that would include scaling back or shutting down its correspondent lending channel, with executives reportedly concerned about the financial and reputational risk of buying mortgages from third parties.

On Dec. 20, Wells Fargo announced it had agreed to pay $3.7 billion to settle allegations by federal regulators that it harmed millions of consumers over a period of several years through widespread mismanagement of mortgages, auto loans and deposit accounts.

But in announcing the bank’s exit from correspondent lending, Wells Fargo said it was continuing work the company has pursued over the past three years to “simplify” its approach to mortgages.

Kleber Santos

“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,” said Wells Fargo’s head of consumer lending, Kleber Santos, in a statement. “We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus.”

Although Wells Fargo has also been closing retail branches in recent years, the bank said it plans to hire more home mortgage consultants to work in minority communities.

Wells Fargo will broaden an existing $150 million investment from the company’s Special Purpose Credit Program (SPCP) to include purchase loans, and invest an additional $100 million to advance racial equity in homeownership by investing in strategic partnerships with non-profit organizations and community-focused engagements.

Kristy Fercho

Kristy Fercho, Wells Fargo’s head of home lending and diverse segments, representation and inclusion, said in a statement that the bank “will continue to expand our programs to reach more customers in underserved communities by leveraging our strong partnerships with the National Urban League, UnidosUS and other non-profit organizations.”

While correspondent lenders have at times generated more than half of Wells Fargo’s mortgage production, they accounted for a smaller share during the pandemic, when low interest rates spurred a refinancing boom among existing borrowers.

Wells Fargo mortgage originations by channel

Source: Inman analysis of Wells Fargo regulatory filings.

After dipping to a low of 31 percent during the second quarter of 2021, the share of Wells Fargo mortgage originations generated by correspondent lenders rebounded as rising rates put an end to the refi boom.

In last year’s shrinking mortgage market, Wells Fargo was once again increasingly dependent on correspondent lenders, who accounted for 42 percent of the bank’s mortgage loan production during the third quarter.

Get Inman’s Extra Credit Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.

Email Matt Carter

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription