Wells Fargo To Purchase Brokered Loans After All…

July 19, 2012

…But Not Directly…

From National  Mortgage News…

 

In shuttering its wholesale lending channel, Wells Fargo & Co. said it would discontinue funding loans originated by mortgage brokers, but that will not end its relationship with brokers.

The nation’s largest mortgage lender will continue to purchase brokered loans through its correspondent channel, which has cheered up the National Association of Mortgage Brokers.

“NAMB does recognize and appreciates Wells Fargo’s strong support of mortgage brokers in the past and in the future. Wells Fargo is going to continue to do mortgages, only each loan will now go through the correspondent channel and not directly from the broker,” the association said in a statement.

Wells Fargo announced its decision to exit wholesale lending in connection with a $175 million in settlement with the Department of Justice. DOJ alleged that Wells Fargo’s wholesale unit allowed brokers to steer minority borrowers into high-cost subprime loans.

The giant bank denied the allegations but voluntarily agreed to exit the wholesale business to show that it is “fully committed to fair and responsible lending.”

However, the nationwide lender will continue to purchase loans from its approved correspondent lenders that fund and close brokered loans in their own name.

“Wells Fargo Correspondent continues to provide liquidity in the secondary residential mortgage market and continues to purchase mortgages sourced from third parties in the primary residential mortgage market from eligible, approved mortgage banks, savings banks, community banks and credit unions who are fully accountable for their respective mortgage origination processes,” a Wells Fargo Home Mortgage spokeswoman said.

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Wells Fargo Stops Lending — To Brokers

July 13, 2012

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.