Wells Fargo announced this week strategic plans to create a more focused home lending business aimed at serving bank customers, as well as individuals and families in minority communities.
Most notably, the company said it is exiting the correspondent business and plans to reduce the size of its servicing portfolio. Bank officials said these plans continue the work the company has advanced over the past three years to simplify this business.
“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,” CEO Kleber Santos said. “We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus.
“As the largest bank lender to Black and Hispanic families for the last decade, we remain deeply committed to advancing racial equity in homeownership.”
In addition to exiting the correspondent business and reducing the size of its servicing portfolio, Wells Fargo’s strategic plans include:
- Optimizing the retail team to focus primarily on bank customers and underserved communities;
- Broadening existing $150 million investment from the company’s Special Purpose Credit Program to include purchase loans, given the current market environment;
- Investing an additional $100 million to advance racial equity in homeownership, including strategic partnerships with nonprofit organizations and community-focused engagements; the company expects to make ongoing investments in this area in the years to follow;
- Deploying additional home mortgage consultants in local 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 nonprofit organizations,” Kristy Fercho, head of home lending and head of diverse segments, representation and inclusion at Wells Fargo, said. “We also will hire additional mortgage consultants in communities of color.”
The strategic direction for the home lending business and programs to advance racial equity announced this week replace the 2016 and 2017 minority homeownership lending commitments made under prior leadership. In rapidly changing market conditions, Wells officials said they feel this new approach provides flexibility to more quickly address customer needs.
Additionally, the Special Purpose Credit Program, which the company announced in April as initially focused on lowering rates for customers refinancing, will now broaden to include purchase loans. This $150 million investment will reduce the costs for individuals in underserved communities looking to refinance or buy a home, helping more Black and Hispanic families achieve homeownership.