Wells Fargo Announces Strategic Direction for Home Lending: A Smaller, Less Complex Business Focused on Bank Customers and Minority Communities

Rhea-AI Summary

Wells Fargo (NYSE: WFC) announced strategic changes to streamline its Home Lending business, focusing on serving bank customers and minority communities. The bank is exiting the Correspondent business and reducing its Servicing portfolio to lower risks in the mortgage sector. The new direction aims to broaden a $150 million investment in the Special Purpose Credit Program, now including purchase loans, and boost efforts to improve racial equity in homeownership with an additional $100 million investment. These initiatives reflect Wells Fargo's commitment to supporting underserved communities.

Positive

• Broadened Special Purpose Credit Program includes purchase loans to assist underserved communities.
• Adding $100 million to advance racial equity in homeownership, enhancing support for minority families.
• Streamlining Home Lending business to focus on core bank customers and underserved markets.

Negative

• Exiting Correspondent business may reduce revenue streams.
• Reduction in the size of the Servicing portfolio could impact service levels.

SAN FRANCISCO--(BUSINESS WIRE)-- Wells Fargo (NYSE: WFC) announced today strategic plans to create a more focused Home Lending business aimed at serving bank customers, as well as individuals and families in minority communities. Notably, the company is exiting the Correspondent business and plans to reduce the size of its Servicing portfolio. These plans continue the work the company has advanced over the past three years to simplify this business.

Facade of a Wells Fargo bank branch (Photo: Wells Fargo)

“Mortgage is an important relationship product, and our goal is to continue to be the primary mortgage lender to Wells Fargo bank customers as well as minority homebuyers. We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus,” said Kleber Santos, CEO of Consumer Lending. “As the largest bank lender to Black and Hispanic families for the last decade, we remain deeply committed to advancing racial equity in homeownership.”

In addition to exiting the Correspondent business and reducing the size of its Servicing portfolio, Wells Fargo’s strategic plans include:

• Optimizing the Retail team to focus primarily on bank customers and underserved communities
• Broadening existing $150 million investment from the company’s Special Purpose Credit Program (SPCP) to include purchase loans, given the current market environment
• Investing an additional $100 million to advance racial equity in homeownership, including strategic partnerships with non-profit organizations and community-focused engagements; the company expects to make ongoing investments in this area in the years to follow
• Deploying additional Home Mortgage Consultants in local minority communities

“We will continue to expand our programs to reach more customers in underserved communities by leveraging our strong partnerships with the National Urban League, UnidosUS and other non-profit organizations,” said Kristy Fercho, head of Home Lending and head of Diverse Segments, Representation and Inclusion at Wells Fargo. “We also will hire additional mortgage consultants in communities of color.”

The strategic direction for the Home Lending business and programs to advance racial equity announced today will replace the 2016 and 2017 minority homeownership lending commitments made under prior leadership. In rapidly changing market conditions, this new approach provides flexibility to more quickly address customer needs. Additionally, the Special Purpose Credit Program the company announced in April that initially focused on lowering rates for customers refinancing will now broaden to include purchase loans. This $150 million investment will reduce the costs for individuals in underserved communities looking to refinance or buy a home, helping more Black and Hispanic families achieve homeownership.

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a leading financial services company that has approximately $1.9 trillion in assets, proudly serves one in three U.S. households and more than 10% of small businesses in the U.S., and is a leading middle market banking provider in the U.S. We provide a diversified set of banking, investment and mortgage products and services, as well as consumer and commercial finance, through our four reportable operating segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth & Investment Management. Wells Fargo ranked No. 41 on Fortune’s 2022 rankings of America’s largest corporations. In the communities we serve, the company focuses its social impact on building a sustainable, inclusive future for all by supporting housing affordability, small business growth, financial health, and a low-carbon economy.

News, insights, and perspectives from Wells Fargo are also available at Wells Fargo Stories.

Additional information may be found at www.wellsfargo.com | Twitter: @WellsFargo

Cautionary Statement About Forward-Looking Statements

This news release contains forward-looking statements about our future financial performance and business. Because forward-looking statements are based on our current expectations and assumptions regarding the future, they are subject to inherent risks and uncertainties. Do not unduly rely on forward-looking statements as actual results could differ materially from expectations. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. For information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.

News Release Category: WF-CF

View source version on businesswire.com: https://www.businesswire.com/news/home/20230110005938/en/

Media

Jennifer Langan, 213-598-1490

Jennifer.Langan@wellsfargo.com

Investor Relations

John Campbell, 415-396-0523

John.M.Campbell@wellsfargo.com

Source: Wells Fargo & Company

FAQ

What are Wells Fargo's new plans for the Home Lending business in 2023?

Wells Fargo is focusing on serving bank customers and minority communities by exiting the Correspondent business and reducing its Servicing portfolio.

How much is Wells Fargo investing to advance racial equity in homeownership?

Wells Fargo is investing an additional $100 million to promote racial equity in homeownership.

What is the purpose of Wells Fargo's Special Purpose Credit Program?

The Special Purpose Credit Program aims to provide financial assistance, now including purchase loans, to underserved communities, with a total investment of $150 million.

What changes did Wells Fargo announce regarding its mortgage offerings?

Wells Fargo announced it will exit the Correspondent business and reduce its Servicing portfolio, focusing more on bank customers and minority homebuyers.