Wells Fargo Eliminates Mortgage Lending Division, Cuts 450 Jobs
SAN FRANCISCO (AP) _ Prompted by falling demand for loans from first-time home borrowers, Wells Fargo & Co. will cut back its mortgage division and eliminate 450 jobs, the bank said Tuesday.
The bank will no longer originate first mortgages, though it will continue to originate second mortgages and home equity lines of credit, spokeswoman Lorna Doubet said.
The bank is negotiating with a number of outside companies that would offer home loans to Wells Fargo customers. The changes do not affect customers who currently have mortgage loans with the bank, Wells Fargo said.
Higher interest rates have eroded demand for mortgages. With fewer customers and lots of competitors, many banks have shut down or sold off parts of their mortgage units, usually the servicing end, which handles loan payments.
Most banks say they plan to continuing making home loans. Wells Fargo decided to cut its business because of thin profit margins, officials said.
``Importantly, given the investment that would be required, our future as an originator and seller of loans is not as cost effective as the alternative of forming an alliance with a partner well established in this area,″ said Jim Ketchum, executive vice president.
Wells Fargo will shut processing centers in San Diego, El Monte and Santa Ana and eliminate 200 sales people, 195 loan processors, and dozens of support staff workers throughout California.