A MAJOR bank has announced it will take a step back from providing Americans will home loans.
Wells Fargo used to be the number one mortgage lending bank in the US, but factors like higher interest rates and a major scandal have put major pressure on the company which is now reportedly looking at layoffs.
2
2
The bank was previously focused on providing as many Americans as possible with financial lending.
However, now Wells Fargo will transition to providing services for existing bank and weather management customers and borrowers in minority communities, it announced 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,” said CEO of consumer lending Kleber Santos.
The lending market has put major pressure on Wells Fargo after the Federal Reserve began raising rates, spurring leadership to question how profitable the business is, CNBC reports.
The bank also was under fire following a 2016 scandal that found that Wells Fargo execs created conditions that allowed fraudulent activity to take place, leading the Fed to crack down.
“We are acutely aware of Wells Fargo’s history since 2016 and the work we need to do to restore public confidence,” Santos told CNBC.
“As part of that review, we determined that our home-lending business was too large, both in terms of overall size and scope.”
What this means
With its massive lending sector being restructured, Wells Fargo confirmed that new layoffs will take place.
However, the group failed to mention exactly how many people would be laid off.
This comes after thousands of mortgage workers were terminated or volunteered to leave the company last year while the business declined.
Other major banks such as Bank of America and JPMorgan Chase have also stepped away from the housing market, meaning that finding loans for the average consumer will be a bit more complicated.
According to CNBC, services like Rocket Mortgage and United Wholesale Mortgage are non-bank players that have filled the gaps and seen major success.
However, these groups are not subjected to the same regulations that banks are, meaning lendees could find themselves in trouble if they don’t play their cards right.
Though, minority communities are apparently in luck, as Wells Fargo is reportedly investing $100million toward its goal of Black and Hispanic homeownership.
“Our priority is to de-risk the place, to focus on service out own customers and play the role that society expects us to play as it relates to the racial homeownership gap,” Santos said.
Head of Diverse Segments, Representation, and Inclusion Kristy Fercho said: “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.”
This comes as a mortgage expert exclusive gave The U.S. Sun tips on how to successfully buy a house in today’s high-inflation economy.
