Published by Forbes.com | January 11, 2023
Wells Fargo will not make any new mortgage loans to white people who are not already customers. They’ll be focusing on providing mortgages to those in minority communities.
One of the three biggest mortgage lenders (and once holding the number one spot) in the United States, Wells Fargo, is stepping back from the mortgage market. They’re not getting out of it entirely, but they’re making drastic changes to their strategy, in one of the biggest shake ups we’ve seen in years.
Wells Fargo’s objective used to be to get in (and on the house deed for) as many U.S. homes as possible. Now they’re looking to bring their main business more closely in line with their biggest competitors, like Bank of America and JPMorgan Chase, who cut their mortgage offerings after the 2008 financial crisis.
It’s the latest change in the shifting fortunes of Wall Street, which has continued to go through disruption and change post-2008. This has been partly as a result of the new regulations and corporate lessons learned from the crash, but also the pressure from disruptors in the sector.
Wells Fargo’s strategy used to be focused on pure volume. Getting as many mortgage customers as they possibly could, across all segments of the market. Now, CEO Charlie Scharf is going to be focusing on lending to their existing customers, as well as improving their service offer for minorities.
For homeowners and would-be-homeowners, a major exit from the market like this is sure to have consequences. So what are they and how is this likely to impact the mortgage industry?