Wells Fargo reveals another layoff in Iowa
In a context of declining mortgage activity, Wells Fargo last week informed Iowa state authorities of its intention to lay off 36 employees.
The downsizing came from its offices in Des Moines, Clive, Ankeny and West Des Moines, according to a WARN notice filed in Iowa Workforce Development. The Des Moines metro area is the headquarters of the bank’s home lending division. The termination date is scheduled for December 31.
Wells Fargo did not describe the reason for the layoff or reveal the number of employees remaining in the home loan division.
“We regularly review and adjust staffing levels to align with market conditions and the needs of our businesses,” a spokesperson said. “We are working hard to identify opportunities for employees in other parts of the business so that we can retain as many employees as possible. Where this is not possible, we provide assistance, such as severance pay and career guidance.
The latest layoff announcement from the country’s second-biggest lender comes amid faltering home loan business. Home loan revenue fell to $972 million in the second quarter, a sequential decline from $1.5 billion in the prior quarter. In the second quarter of 2021, the company recorded $2.1 billion in revenue from home loans.
More than 240 positions have been cut from Iowa offices this year and 75 more employees will be laid off in October, according to Iowa Workforce Development.
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Amid a mortgage market expected to nearly halve in 2023, Wells Fargo plans to reduce its presence in the mortgage business. Bloomberg announced last month that it was considering reducing its correspondent lending and third-party servicing businesses.
Under matching loans, Wells Fargo finances the loan arranged by strangers and the bank fears that it could be liable for “reputational damage” when it finances large amounts of loans issued by other companies.
Bloomberg also said Wells Fargo also plans to cut its third-party services, including the service of Federal Housing Administration (FHA) loans.
Custodian banks have reduced their mortgage headcount as they reprice mortgages in a higher rate environment. Town, JPMorgan Chase and American bank also cut an undisclosed number of jobs in their mortgage divisions this year.
Wells Fargo was the nation’s second-largest mortgage lender by volume in the second quarter, just behind Rocket Mortgageis $34.54 billion in volume, according to Inside Mortgage Finance.