Wells Fargo & Co. is pulling the plug on its consumer finance division, and will cease production of all nonprime mortgage loans funded through the unit.
The servicing of a roughly $20 billion mortgage portfolio will be shifted over to Wells Fargo Home Mortgage.
The bank will close all 638 branch stores of Wells Fargo Financial with 3,800 full timers eventually losing their jobs.
A spokesman for the bank told National Mortgage News that nonprime mortgage production accounted for "less than one-tenth of one-percent" of the bank's residential fundings in the first quarter. (Among all originators, Wells ranked first in 1Q with home mortgage production of $77 billion, according to the Quarterly Data Report.)
"Our network of U.S.-based consumer finance stores, which have historically operated as an independent sales channel from our bank operations, have served customers well for more than 100 years," David Kvamme, president of Wells Fargo Financial, said in a prepared statement, "but the economics of a separate Wells Fargo Financial channel are no longer viable, especially now that our customers have access to the largest banking and mortgage store network in the United States."
In 2008 Wells bought the struggling Wachovia Corp., which boosted its retail presence throughout the nation. The bank said the restructuring of Wells Fargo Financial will not impact its community banking and home mortgage stores currently in operation.
The branch closings and layoffs will cost the bank $185 million.
