Wells Fargo, one of the largest banks in the United States, has laid off hundreds of mortgage bankers as part of its recent strategic shift. The bank is pulling back from parts of the U.S. mortgage market, which it once dominated, and is now focusing mostly on serving existing customers and minority communities.
The layoffs were announced on Tuesday and affected mortgage bankers and home loan consultants spread around the country. The workers are compensated mostly on sales volume, according to sources familiar with the matter who declined to be identified.
The layoffs come just days after the bank rewarded some top producers, including a few bankers who surpassed $100 million in loan volumes last year and who recently attended an internal sales conference for high achievers. The cuts also included bankers who operated in areas outside of the bank’s branch footprint and who therefore did not fit into the new strategy of catering to existing customers, according to the sources.
The bank’s shift in strategy is aimed at surviving the collapse in loan volumes brought on by sharply higher interest rates. Other major banks, including JPMorgan Chase, have also been forced to cut thousands of mortgage positions in the past year due to the same market conditions.
Under CEO Charlie Scharf, Wells Fargo has been working to restructure and regain its reputation following a series of scandals and controversies in recent years. The bank has faced numerous regulatory penalties and lawsuits over issues such as fake accounts, improper mortgage fees, and discriminatory lending practices.
The recent layoffs are part of the bank’s ongoing efforts to streamline its operations and improve efficiency. In addition to reducing its mortgage workforce, the bank has also announced plans to cut jobs in other areas and to close branches as it focuses on digital banking and other innovative technologies.
Wells Fargo has laid off hundreds of mortgage bankers as part of a sweeping round of cuts due to the bank’s recent strategic shift. The layoffs, announced on Tuesday, impacted some of the bank’s top producers, including a few bankers who attended an internal sales conference for high achievers in Palm Desert, California. The move comes as Wells Fargo is pulling back from parts of the US mortgage market and is instead focusing on serving existing customers and minority communities. The bank is cutting workers who operated outside its branch footprint and who do not fit into the new strategy of catering to existing customers. The cuts include bankers across the Midwest and the East Coast.
While the latest round of cuts wasn’t based on employee performance, Wells Fargo has also been cutting mortgage workers who don’t meet minimum standards of production, which is at least $10 million worth of loans over the past 12 months in areas with expensive housing. The bank’s mortgage volumes continued to shrink in the fourth quarter, falling 70% to $14.6 billion. As a result, the bank has almost 11,000 fewer employees at the end of 2022 than in 2021.
A Wells Fargo spokeswoman said that the bank has communicated with affected employees, provided severance and career guidance, and tried to retain as many workers as possible. CEO Charlie Scharf addressed employees in a town hall meeting in January in which he reiterated his rationale for the mortgage retrenchment. The bank will continue to serve customers “in any market in the United States” through its centralized sales channel, according to the spokeswoman.