Due to the ‘significant changes within the mortgage industry over the past several years,’ Cincinnati-based Fifth Third Bank – one of the country's largest regional banks and the principal subsidiary of holding company Fifth Third Bancorp – is exiting the wholesale mortgage lending business.
‘Fifth Third conducts regular reviews of the industries we serve based on the changing competitive and regulatory environment,’ Bob Lewis, the bank's president, writes in a letter sent to customers, a copy of which was acquired by MortgageOrb. ‘Based on the current environment, and after careful consideration, we have decided to exit the wholesale business and focus third-party origination on correspondent lending.’
‘We intend to build on our leadership position in the correspondent market and remain committed to purchasing loans from smaller financial institutions and independent mortgage companies,’ Lewis adds.
As per the letter, the bank will terminate its residential wholesale loan broker agreements as of March 14.
Lewis says the bank will continue to work with wholesale customers to ensure ‘that loans currently in the pipeline are fulfilled and processed.’
Fifth Third Bank – self-dubbed ‘The Curious Bank‘ – will continue to accept new registrations through March 14 and will continue to accept applications until March 31, the letter states.
The news comes just weeks after Fifth Third's former vice president, Christopher David Boston, pleaded guilty in federal court to embezzling around $10.5 million from the bank from 2009 to 2013 – however, the bank's exit from wholesale lending is unrelated to the case.
According to the Department of Justice (DOJ), Boston was working at the Mandarin, Ohio location of Fifth Third Bank as a vice president and private banker when he embezzled the money from three accounts – including about $2.2 million from a corporate account and $8.3 million from two individual customer accounts.
Boston reportedly used most of the money to help customers of the bank. He reportedly deposited some of the money into certain customer accounts as a way to bolster their creditworthiness. He also used the stolen funds to pay off customers' troubled loans, provide customers with ‘enhanced’ interest and provide loans to people who had been turned down, according to the DOJ. He faces up to 30 years in prison.
In another unrelated event, one of the bank's data furnishers, TSYS, found itself in some hot water recently when it accidentally reported to the credit bureaus that more than 21,000 of Fifth Third's customers were ‘bankrupt.’ TSYS apologized to customers and said the mistake was due to a coding error.