Although buying loans from independent mortgage brokers makes up only 5 percent of mortgage giant Wells Fargo’s loan originations, its announcement yesterday that it will stop buying those loans altogether could mean trouble for brokers.
The mortgage giant’s decision to halt the practice of buying from brokers follows similar moves by Bank of America, JP Morgan Chase and Citigroup, according to the Wall Street Journal. As noted earlier this morning, brokers are claiming Wells Fargo’s exit will likely be felt most keenly by consumers, who will have to compare prices independently to determine the best deals.
“It’s part of a larger trend that’s forcing consumers to get more of their mortgages through retail offices,” Guy Cecala, publisher of Inside Mortgage Finance, told the Journal.
As The Real Deal previously reported in a July profile of Wells, the company originated 33.9 percent of all mortgages in the United States in the first quarter of this year. The announcement comes hot on the heels of the revelation that Wells has to pay out $175 million for allegedly engaging in discriminatory lending practices in the mid 2000s. [WSJ]