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Wells Fargo has laid off 140 employees as part of a plan to exit the correspondent mortgage lending business announced last month.
In a Worker Adjustment and Retraining Notification (WARN) filed in Illinois and reported on by the State Journal-Register (Springfield, Illinois) the company outlined its plans to reduce its workforce size. The company began executing the plan on Tuesday at its offices in Springfield.
All of the affected employees were employed in correspondent lending, in which Wells Fargo purchases loans originated by other financial institutions, a spokesperson for the bank told the newspaper.
The round of layoffs is one of several the banking giant has made as it scales down its mortgage division. Prior to this round, the company laid off hundreds of employees in December.
Information was not readily available on the positions of the employees who were let go.
Wells Fargo, the nations largest depository mortgage lender, announced on Jan. 10 that it would stop purchasing loans from depository lenders, and would shift its focus serving its banking customers and minority customers. Executives were reportedly concerned about the financial and reputational risk of buying mortgages from third parties according to Bloomberg.
The pullback also came after Wells Fargo announced on Dec. 20 that it had agreed to pay $3.7 billion to settle allegations by the federal government that it had harmed millions of consumers over a period of several years through widespread mismanagement of mortgages, auto loans and deposit accounts.
In its Jan. 10 statement, the company said downsizing was part of its work over the past three years to “simplify” its approach to mortgages.
“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,” Kleber Santos, Wells Fargo’s head 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.”
While 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.
“We 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,” Kristy Fercho, head of Home Lending and head of Diverse Segments, Representation and Inclusion at Wells Fargo said in the statement. “We also will hire additional mortgage consultants in communities of color.”
