Wells Fargo has announced that on July 13, it will discontinue funding mortgages that are originated, priced and sold by independent mortgage brokers through its wholesale channel. Mortgages sold by independent brokers through the wholesale channel currently represent five percent of the company’s home mortgage funded volume.
According to Wells Fargo, mortgage brokers operate as independent businesses and are not employed by Wells Fargo. Therefore, Wells Fargo cannot set loan prices for independent mortgage brokers nor control the combined effect of the negotiations that thousands of these independent mortgage brokers conduct with their customers.
“Wells Fargo takes pride in serving the homeownership needs of all of our customers, and we are fully committed to fair and responsible lending," said Mike Heid, president of Wells Fargo Home Mortgage. "Through our separate decision to no longer fund mortgages through independent mortgage brokers, we can control how that commitment is met on every mortgage that Wells Fargo makes.”
After Friday, July 13, Wells Fargo will no longer accept new applications for loans originated by independent mortgage brokers through its wholesale channel, but will work to ensure existing applications are processed and closed.
Here are some thoughts from the industry's top wholesalers ...
"Wells Fargo exiting wholesale represents an enormous opportunity for others in this industry. It also drives home how critical it is for wholesalers not to have a dependency on the need to sell their production to other institutions. In the past, brokers found comfort in the perceived stability of the big banks, but clearly that is not the case any longer. Independent mortgage brokers are realizing that working with a lending firm that specializes only in the mortgage industry is a more stable option. REMN, being a direct Ginnie Mae seller-servicer and selling to Fannie Mae on the conventional side, will enable ourselves and firms like us to take advantage of these new opportunities."—Joe Amoroso, national director of sales of Real Estate Mortgage Network Inc. (REMN)
"For well capitalized companies, I see a real opportunity for companies like American Mortgage Network to increase market share as a large number of wholesale account executives exit Wells to find employment with other wholesale lenders. I also forsee a possibility that existing correspondent and warehouse lenders may reasses the risk in third party originations with tighter standards the result."—John Robbins, CEO of Bexil American Mortgage and American Mortgage Network
"Although it is hard to miss the opportunity that $7 billion of quarterly business left sitting on the table provides, it is even harder to get excited knowing that the independent mortgage broker has fewer and fewer options. In my opinion, brokers are an integral part of the housing recovery and any changes that affect their future also affect the recovery. It is my hope that some of the larger players step up to keep mortgage brokers thriving. As for First Guaranty Mortgage Corporation, we will continue our steady but manageable growth."—Andrew Peters, CEO of First Guaranty Mortgage Corporation
“Wells’ decision to shut down its wholesale channel is unfortunate, as we hate to see any strong company leave the wholesale business. At United Wholesale Mortgage, our focus has always been on providing world-class customer service to all of our brokers, and with the exit of Wells Fargo, we hope to be able to touch even more brokers who are looking for a great business partner. We have been experiencing record growth at UWM and we view this as an opportunity to add even more quality brokers to our network. We are intensely-focused on providing second-to-none service to our Brokers and are confident that we will be able to help those that used Wells as one of their preferred go to lenders.”—Mat Ishbia, President of United Wholesale Mortgage
“With Wells Fargo funding approximately $3 billion a month in wholesale production, the direct opportunity for 360 Mortgage Group is very clear. However, we have always believed that the mid-tier banker is better qualified to support quality brokers throughout the wholesale channel. The mid-level mortgage bank has the ability to monitor and maintain a closer relationship with the mortgage brokers and cater to their needs from a service level perspective as well as a compliance perspective. The mega banks like Wells Fargo and Bank of America simply did not have the ability to provide that close-knit partnership. This is an opportunity for the medium-sized players to be on equal footing and prove their value to the brokers, consumers and the agencies."—Mark Greco, president of 360 Mortgage Group
"CBC National Bank has been committed to the wholesale business and remains committed to the wholesale business. We see this as an opportunity to grow our boutique style of wholesale business which is focused on quality originators who are committed long term to their trade. We are not the right wholesale partner for every broker in this industry as we expect a very high of quality of business from our broker partners."—Charles Wagner, executive vice president of CBC National Bank
“We believe it will provide a tremendous opportunity for TMS Funding, Total Mortgage’s wholesale division, to gain market share in the wholesale channel. We have already received numerous calls from brokers looking to sign up with us, given the void left in the wake of Wells Fargo’s departure from the wholesale space. We welcome all inquiries from quality brokers, but we will continue to be selective in approving new partners.”—John Walsh, president of Total Mortgage Services LLC