Permanent or Temporary Move?
Wells Fargo has announced that on July 13, it will discontinue funding home loans that are originated, priced and sold by independent brokers through its wholesale channel. Residential lonas sold by independent brokers through the wholesale channel currently represent five percent of the company’s home loans funded volume. According to Wells Fargo, brokers operate as independent businesses and are not employed by Wells Fargo. Therefore, Wells Fargo cannot set loan prices for independent brokers nor control the combined effect of the negotiations that thousands of these independent brokers conduct with their customers. “Wells Fargo takes pride in serving the homeownership needs of all of our customers, and we are fully committed to fair and responsible lending,” said Mike Heid, president of Wells Fargo Home Mortgage. “Through our separate decision to no longer fund loans through independent brokers, we can control how that commitment is met on every loan that Wells Fargo makes.”
After Friday, July 13, Wells Fargo will no longer accept new applications for loans originated by independent brokers through its wholesale channel, but will work to ensure existing applications are processed and closed. Source: National Mortgage Professional
Will they come back?
A day after Wells Fargo quit the wholesale channel, sending shock waves throughout the industry, at least one trade group official believes that eventually the bank may re-enter.
“I wouldn’t be surprised if Wells re-entered the wholesale market sometime in the future,” said Marc Savitt, president of the National Association of Independent Housing Professionals, a trade group that represents loan officers and appraisers, among others.
Wells told this website that it will remain in correspondent lending. (Early Friday there was speculation that Wells might eventually exit correspondent lending, too.)
Savitt and other brokers said they are seeing more new wholesalers enter the channel every week. (The NAIHP chief owns a brokerage firm in West Virginia and has been on the forefront of industry efforts to change loan officer compensation rules that will create licensing and testing parity between bank and nonbank LOs.)
Some in the industry believe it may take these new wholesale players several years before they can fill the capacity vacuum created by Wells, but not Savitt. “The temporary void created by the Wells exit will quickly be filled,” he told National Mortgage News.