- Wells Fargo notified 107 Iowa-based workers last week they would be laid off by late August, according to Worker Adjustment and Retraining Notification Act (WARN) notices filed June 30.
- The bank’s home mortgage division is based in Des Moines — meaning the job cuts most likely mark a continuation of a cull Wells Fargo began in April in the sector. Ninety Iowa-based Wells Fargo employees had been laid off since that month.
- The staff cuts “are the natural result of cyclical changes in the broader home lending environment,” Wells Fargo said in a statement, citing figures from the Mortgage Bankers Association that predict a 40% year-over-year drop in mortgage originations — to $2.4 trillion — in 2022. Further, the trade group expects a 70% downturn in mortgage refinancing, according to the bank.
The Wells Fargo job cuts aren’t limited to Iowa. An undisclosed number of cuts in April affected the bank’s offices in Phoenix, San Antonio, Minneapolis and Charlotte, North Carolina, The Layoff reported. Further, at least 32 Wells Fargo employees in California have been targeted for layoffs since April, according to WARN notices seen by American Banker.
Wells Fargo spokesperson Elise Corbett told the Des Moines Register 35% of “those impacted in home lending so far this year” have moved to other roles within the company.
"The employees affected by these changes have each been an essential part of our success," Corbett said Tuesday. "We are carrying out displacements in a transparent and thoughtful manner and providing assistance, such as severance and career counseling.”
Wells Fargo saw a 33% drop in mortgage banking income year over year, according to its April earnings report. It remains to be seen what 2022’s second quarter brought to the sector. The bank is scheduled to release those figures July 15.
Inflation, however, has taken a toll on 30-year fixed-rate mortgages, driving the average attached interest rate to 5.30% as of Thursday — an increase from 3.22% at the beginning of 2022, according to figures from Freddie Mac. That’s down, however, from last week’s high of 5.70%, The Wall Street Journal reported.
The downturn in the mortgage sector comes as the bank has seen negative press over a gap — along racial lines — in the acceptance of mortgage refinance applications.
A March analysis of federal mortgage data by Bloomberg found that Wells Fargo approved 47% of mortgage refinance applications from Black homeowners in 2020 but 72% from White borrowers.
Wells Fargo denied any wrongdoing, saying the wire service’s investigation “ignored” that the bank helped more Black homeowners refinance their mortgages than any other major lender.
“We are confident that our underwriting practices are consistently applied regardless of the customer’s race or ethnicity,” Paul Turner, a bank spokesperson, said at the time.
Wells Fargo narrowed that gap by 4 percentage points in 2021, accepting 58% of mortgage refinancing applications from Black homeowners. However, the bank also accepted a greater percentage — 79% — of mortgage refinancing applications from White borrowers that year.