DES MOINES - Wells Fargo Home Mortgage's deal to buy First Union's servicing business has not worked out as planned.
Wells said Tuesday that it had purchased only $35.7 billion of First Union's $52 billion portfolio, and had not bought the Charlotte, N.C., company's servicing center in Raleigh. In June, Wells had signed a letter of intent to buy the entire portfolio and the Raleigh center.
A spokesman for the Wells Fargo & Co. unit said the servicing operation "raised some issues not anticipated by either company in the initial letter, so we were not able to come to terms." He declined to say what those issues were.
The portion of the portfolio that Wells decided to buy consists of servicing rights on loans that First Union serviced for other investors, the spokesman said. The rest of the rights were for loans that First Union holds on its books.
In a joint statement issued Tuesday, the two companies said the center "will remain with First Union Mortgage Corp. and will be restructured as part of First Union's announced plans to exit the mortgage servicing business." The statement did not specify what form the "restructuring" would take.
Attempts Thursday to reach First Union officials for clarification by press time were unsuccessful.
First Union's decision to get out of servicing, announced in June, was part of a restructuring that also included shutting down origination operations at its subprime unit, Money Store.