Fifth Third Latest Bank to Quit Wholesale
Fifth Third Bank is quitting the wholesale loan purchase business, the latest lender to do so, citing competitive and regulatory concerns.
A "Dear Valued Customer" letter circulated Monday says the bank remains committed to purchasing loans from smaller financial institutions and independent mortgage companies. The Cincinnati bank confirmed the letter was genuine.
“There have been significant changes within the industry over the past several years, and based on the changes in the competitive and regulatory environment, we decided to exit the business,” says Sean Parker, a spokesman for Fifth Third.
Fifth Third will terminate broker agreements on March 14, although it will process loan applications already registered through the end of the month.
Third party lenders are worried about potential secondary market buybacks and want to deal with an entity that has the capital to repurchase the loans, says Don Frommeyer, president of the National Association of Mortgage Brokers.
Amtrust Mortgage Funding Inc., the brokerage shop Frommeyer heads up in Carmel, Ind., was a Fifth Third client.
Lately Fifth Third might have been pricing loans higher than the rest of the market.
In the fourth quarter, Fifth Third was the thirteenth-largest wholesaler in the nation with volume of $728 million, according to MortgageStats.com.
This was down from nearly $3 billion in the second quarter of 2013, when the bank ranked third among wholesalers and $2 billion in the fourth quarter of 2012, when Fifth Third ranked eighth.