Wells Fargo — the nation's largest funder of home mortgages through loan brokers — is calling it quits on wholesale lending, dealing yet another devastating blow to this struggling origination channel.
"We will still fund loans through correspondents," a Wells spokeswoman confirmed to National Mortgage News, "but for independent mortgage brokers things will change."
She said the cut-off date is Friday, July 13. Further clarification on the issue will come later today.
According to NMN and the Quarterly Data Report, Wells ranked first in 1Q in wholesale lending, table funding $7.3 billion of mortgages through brokers. Provident Funding Associates, Burlingame, Calif., ranked a close second with $7 billion.
After those two, the next largest player is Flagstar Bank FSB with $2.9 billion.
Wells' decision to exit the channel comes in the wake of a fair lending settlement with the Justice Department. "While not part of the DOJ settlement, Wells Fargo, on its own volition, also announced today that on July 13 it will discontinue funding mortgages that are originated, priced and sold by independent mortgage brokers through its mortgage Wholesale channel," the company said in a press statement.
It added: "Mortgages sold by independent brokers in this manner currently represent five percent of the Company's home mortgage funded volume. Mortgage brokers operate as independent businesses and are not employed by Wells Fargo. Therefore, Wells Fargo cannot set loan prices for independent mortgage brokers nor control the combined effect of the negotiations that thousands of these independent mortgage brokers conduct with their customers.
After July 13, 2012, the Company will no longer accept new applications for loans originated by independent mortgage brokers through its Wholesale channel, but will work to ensure existing applications are processed and closed."