In shuttering its wholesale lending channel, Wells Fargo & Co. said it would discontinue funding loans originated by mortgage brokers, but that will not end its relationship with brokers.
The nation’s largest mortgage lender will continue to purchase brokered loans through its correspondent channel, which has cheered up the National Association of Mortgage Brokers.
“NAMB does recognize and appreciates Wells Fargo’s strong support of mortgage brokers in the past and in the future. Wells Fargo is going to continue to do mortgages, only each loan will now go through the correspondent channel and not directly from the broker,” the association said in a statement.
Wells Fargo announced its decision to exit wholesale lending in connection with a $175 million in settlement with the Department of Justice. DOJ alleged that Wells Fargo’s wholesale unit allowed brokers to steer minority borrowers into high-cost subprime loans.
The giant bank denied the allegations but voluntarily agreed to exit the wholesale business to show that it is “fully committed to fair and responsible lending.”
However, the nationwide lender will continue to purchase loans from its approved correspondent lenders that fund and close brokered loans in their own name.
“Wells Fargo Correspondent continues to provide liquidity in the secondary residential mortgage market and continues to purchase mortgages sourced from third parties in the primary residential mortgage market from eligible, approved mortgage banks, savings banks, community banks and credit unions who are fully accountable for their respective mortgage origination processes,” a Wells Fargo Home Mortgage spokeswoman said.
