San Francisco-based Wells Fargo & Co. has announced that it will discontinue funding mortgages that are originated, priced and sold by independent mortgage brokers through its mortgage wholesale channel. Mortgages sold by independent brokers in this manner currently represent 5% of the company's home mortgage funded volume. This change goes into effect on July 13.
‘We can control how that commitment is met on every mortgage that Wells Fargo makes,’ says Mike Heid, president of Wells Fargo Home Mortgage.
Wells Fargo will no longer accept new applications for loans originated by independent mortgage brokers through its wholesale channel, but it says that existing applications will be processed and closed.
Separately, Wells Fargo has agreed to a $125 million settlement with the U.S. Department of Justice (DOJ) regarding claims that the lender engaged in discriminatory actions against African-American and Hispanic borrowers.
This settlement also resolves pending litigation filed in 2009 by the State of Illinois on behalf of borrowers there, and resolves an investigative complaint filed in 2010 by the Pennsylvania Human Relations Commission. The San Francisco-based lender says that it is settling the case ‘solely for the purpose of avoiding contested litigation with the DOJ, and to instead devote its resources to continuing to provide fair credit services and choices to eligible consumers, and important and meaningful assistance to borrowers in distressed U.S. real estate markets.’
Wells Fargo also says it will provide $50 million to community improvement programs in Baltimore and in communities within seven metropolitan statistical areas ‘identified by the DOJ as being most in need of support to recover from the housing crisis.’