Wells Fargo Bank is getting out of the mortgage broker joint venture business, withdrawing due to mortgage reform.
Wells Fargo Ventures, LLC, a wholly-owned operating subsidiary of Wells Fargo Bank, N.A., plans to withdraw from its eight joint ventures in mortgage lending. Wells Fargo plans to complete the task over the next 12 to 18 months.
One of the nation’s largest mortgage lenders, Wells Fargo had more than 80 joint ventures two years ago. It’s closed all but the eight, which had accounted for 3 percent of it’s mortgage business.
Wells Fargo began forming mortgage joint ventures more than 20 years ago, successfully leveraging them to provide mortgage lending and services to customers and referral sources around the country.
The bank’s decision to end joint ventures is based on the current regulatory and market environment as changes in state and federal oversight have increased the complexity and difficulty of operating mortgage joint ventures.
The Consumer Financial Protection Bureau, under the auspices of the Dodd-Frank Wall Street Reform and Consumer Protection Act, is rolling out the the largest federal regulatory overhaul of the mortgage industry since the Great Depression.
Most of the new regulations are due to take affect in January 2013 and come after the mortgage crash that contributed largely to the Great Recession.
The bank doesn’t expect the move will hurt consumer service or loan processing. Joint venture customers with a mortgage loan application in process will continue to have their applications processed by the joint venture and may call their existing mortgage consultant with questions.
“This decision reflects our response to new operating realities and our commitment to continuously improving our business model,” said Franklin Codel, executive vice president, head of Mortgage Production.
Some 300 Wells Fargo team members could somehow feel the change. Joint venture companies operate independently and impacts on each will vary, but Wells Fargo said it would strive to retain as many “impacted team members as possible, through opportunities at the bank.
The eight joint ventures hanging up their Wells Fargo spurs are:
- Bankers Funding Company, LLC
- Colorado Mortgage Alliance, LLC
- DE Capital Mortgage, LLC
- Home Services Lending, LLC
- Military Family Home Loans, LLC
- Prosperity Mortgage Company
- Premia Mortgage LLC
- Private Mortgage Advisors, LLC