Wells Fargo to shrink mortgage business, exit correspondent lending

WELLS Fargo & Co will slim down its home lending business by reducing its mortgage servicing portfolio and exiting the correspondent lending business, the company said on Tuesday. “We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus,” Kleber Santos, the bank’s chief executive for consumer lending, said in a statement. Demand for mortgages and refinancing has weakened as US interest rates climbed, making it more costly to buy homes. The slowdown prompted Wells Fargo to cut thousands of jobs in is mortgage unit across the country last year.

The company will report fourth-quarter results on Friday. Analysts expect a profit of 62 cents a share, compared with US$1.25 in the year ago quarter, according to data from Refinitiv. The bank also plans to invest an additional US$100 million to advance racial equity in home ownership, it said. In December, the US Consumer Financial Protection Bureau hit Wells Fargo with its largest ever civil penalty as part of a US$3.7 billion agreement to settle charges over widespread mismanagement of car loans, mortgages and bank accounts. REUTERS