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Wells Fargo Bank and Prospect Mortgage LLC have both announced that they will withdraw from mortgage marketing services agreements (MSAs) with real estate firms, builders and certain other referral sources. The decision by both companies was made as a result of increasing uncertainty surrounding regulatory oversight of these types of arrangements. Prospect stated that that MSAs are no longer a viable marketing tool for the industry.
“Real estate firms and builders always have been—and will continue to be—very important to Wells Fargo’s retail mortgage operations, and we are exploring a number of new options for enhancing and strengthening those relationships over the long term,” said Franklin Codel, Wells Fargo’s executive vice president for mortgage production. “Because we value our strong relationships with real estate professionals and builders, the decision to exit these marketing services agreements was difficult, but we are taking this action to ensure that we continue to conduct our business in a way that represents the best interests of all of our customers and clients. We believe the best way to earn the relationship with real estate firms and builders is through timely, dependable service delivered by the best team in the business.”
Wells Fargo’s decision will be effective Aug. 1 and the wind down will occur over the following 90 days. Termination of these marketing services agreements is not expected to have a material impact on Wells Fargo’s total mortgage production.
"We have worked very hard at Prospect to establish strategic priorities for the company that will allow us to succeed in this new era for our business,” said Doug Long, Prospect Mortgage's president of National Lending. “Prospect prides itself on our commitment to providing the highest level of customer service. We provide value to our customers through our ability to offer a broad array of products and the deep industry knowledge of our professionals. Given the uncertainty surrounding the use of MSAs, Prospect has made the decision to discontinue marketing activities that depend on these agreements. This decision has no impact on our continuing efforts and commitment to deliver the highest level of value and service to our customers and clients."
Prospect expects their wind-down to be complete by the end of the third quarter.