Facing growing competition and shrinking profits, Wells Fargo & Co. said Tuesday that it will leave the first-mortgage lending business and cut 450 jobs, effective today, mainly in Southern California.
San Francisco-based Wells Fargo, the nation’s 15th-largest banking company, said it will continue to service its existing mortgages and make home equity loans.
Mortgage underwriting profits have fallen in the last year as rising interest rates cut demand for new loans and refinancings. The industry is becoming dominated by ever-larger companies that are content to operate on small profit margins.
“The mortgage industry is operating with substantial excess capacity and loan pricing is depressed,” Jim Ketcham, executive vice president, said in a statement.
Wells Fargo said it will form an alliance with an unnamed partner in order to provide first mortgages to its customers, but it will stop writing the loans itself.
Those being laid off in Southern California are mostly salespeople and loan processors. About 170 are in Los Angeles and Orange counties and an equal number are in Riverside, San Bernardino and San Diego counties, a spokeswoman said.
As part of the move, Wells Fargo will close its loan-processing centers in Santa Ana, El Monte and San Diego, consolidating the servicing in two Northern California offices, the spokeswoman said.