Wells Fargo is reportedly slashing about 2,300 mortgage jobs as demand for refinancings continues to fall as a result of rising interest rates.
The biggest U.S. home lender, Wells Fargo had about 11,406 mortgage loan officers employed as of March 31, according to a Bloomberg News report, meaning that the cuts would equal about 20% of its mortgage workers.
The bank has made other smaller cuts during the past few weeks at locations around the country, sources told Bloomberg News.
The bank has not officially announced the cuts and Bloomberg's sources spoke on condition of anonymity. The report does not state when or where the cuts will take place.
Franklin Codel, head of mortgage production for Wells Fargo, said in a recent memo to staff that mortgage lending is forecast to slow for the rest of the year, according to the report.
"We've had to recalibrate our business to meet customers' needs – and to ensure we're operating as efficiently and effectively as possible," Codel wrote in the memo, according to the report. "Unfortunately, displacements within our team are necessary."
The cuts are part of an overall trend among banks that are rapidly scaling back their mortgage servicing operations in response to dwindling refinancings resulting from rising interest rates. Refinancings accounted for about 70% of the mortgage market during the first half but in recent weeks have slid to about 50% of applications.
In addition, some banks are getting out of servicing altogether, due to increasing regulatory compliance challenges.
Last month, Wells Fargo announced that its joint venture subsidiary, Wells Fargo Ventures, would be withdrawing from its eight joint ventures in mortgage lending, due to regulatory changes that resulted in increased complexity in operating joint ventures.
Up until three years ago, such joint ventures were regulated on the federal level. However, when the Dodd-Frank Act went into effect in 2010, they were then subject to state regulations, which vary considerably from state to state.