Wells Fargo said late Tuesday that it was reducing its home-mortgage business in order to serve its own bank customers as well as people in minority communities. Wells Fargo WFC, also said it was exiting the correspondent business, which serves as a third-party intermediary in transactions, and that it plans to reduce the size of its loan-servicing portfolio.
The stock was down less than 0.1% in the extended session after ending the regular trading day. Wells Fargo said that these plans continue the work the company has done over the past three years to simplify the business. Kleber Santos, chief executive of consumer lending, said that mortgage is an important relationship product, so the decision to continue to be a lender to Wells Fargo bank customers as well as minority home buyers. Santos said that we are making the decision to reduce risk in the mortgage business by reducing its size and narrowing its focus. As the largest bank lender to Black and Hispanic families for the last decade, we remain committed to advancing racial equity in homeownership. Wells Fargo was once one of the top mortgage lenders in the U.S. In the past month, the Consumer Financial Protection Bureau ordered it to pay $3.7 billion for alleged mismanagement of auto loans, mortgages and deposit accounts. The bank did not admit wrongdoing as part of the settlement. Wells Fargo's shares have lost 24% in the past 12 months, compared with losses of around 16% for the S&P 500 index.