Wells Fargo cut hundreds of mortgage-lending employees across the country Thursday, Bloomberg reported, citing anonymous sources familiar with the bank’s plans.
Wells Fargo CFO Mike Santomassimo has telegraphed the likelihood of continued cuts in mortgage lending at least twice since over the past six months, saying in October he expected the segment to “remain challenging in the near term” amid elevated interest rates, which have resulted in reduced enthusiasm from potential borrowers.
“We are making adjustments to reduce expenses in response to lower origination volumes, and we expect these adjustments will continue over the next couple of quarters,” Santomassimo said in July.
The bank had about 18,000 loans in its retail origination pipeline over the first few weeks of the fourth quarter, CNBC reported last month — a slump of as much as 90% from a year earlier.
That mirrors a prediction Santomassimo made to analysts during a third-quarter earnings call in October.
"It's possible that we have a further decline in mortgage banking revenue in the Q4 when originations are seasonally slower,” he said at the time, according to CNBC.
One of the network’s sources said the bank’s stable of mortgage loan officers — numbering more than 4,000 at the beginning of the year — could dip below 2,000.
“We regularly review and adjust staffing levels to align with market conditions and the needs of our businesses,” a Wells Fargo spokesperson told Bloomberg in a statement Thursday.
Scharf said in June the bank was “in the process of changing, strategically, where mortgage fits in.”
“We’re not interested in being extraordinarily large in the mortgage business, just for the sake of being in the mortgage business,” Scharf said in July. “We’re in the home lending business because we think home lending is an important product for us to talk to our customers about, and that’ll ultimately dictate the appropriate size of it.”
Wells is hardly the only mortgage lender to cut staff this year. JPMorgan Chase began laying off hundreds of employees in its home-lending division in June and reassigning hundreds more. Citi, meanwhile, embarked on its own “internal streamlining” in September, encompassing fewer than 100 jobs.
The overall number of new job cuts at Wells is undisclosed. Iowa’s workforce development agency has reported 50 of the bank’s employees in the state have received notices of layoffs taking effect between November and January. Wells Fargo’s mortgage-lending division is based in Des Moines.