- Wells Fargo laid off hundreds of mortgage bankers this week as part of a sweeping series of budget cuts triggered by the bank’s recent strategic shift, CNBC has learned.
- The layoffs were announced on Tuesday and have ensnared some top performers, including a few bankers who surpassed $100 million in loan volumes last year and recently attended an internal sales conference for top performers. .
- The company cut bankers who operated in areas outside of its branch footprint and therefore did not fit the new strategy of catering to existing customers, according to people with knowledge of the situation.
Deserts of Palm Spring, California
Wells Fargo laid off hundreds of mortgage bankers this week as part of a sweeping series of budget cuts triggered by the bank’s recent strategic shift, CNBC has learned.
The layoffs were announced on Tuesday and have ensnared some top performers, including a few bankers who surpassed $100 million in loan volumes last year and recently attended an internal sales conference for top performers. , according to people familiar with the situation.
Under CEO Charlie Scharf, Wells Fargo is pulling out of parts of the US mortgage market, an arena it once dominated. Instead of seeking to maximize its share of US home loans, the bank is primarily focused on serving existing customers and minority communities. The change comes after sharply higher interest rates led to a slump in lending volumes, forcing Wells Fargo, JPMorgan Chase and other firms to cut thousands of mortgage positions over the past year.
Those cut this week at Wells Fargo included mortgage bankers and mortgage consultants, a nationwide workforce that is paid primarily on sales volume, the people say, who declined to be identified when talking about personnel matters.
The company cut bankers who operated in areas outside of its branch footprint and therefore did not fit the new strategy of catering to existing customers, the people said. Those cuts include bankers from the Midwest and East Coast, one of the people said.
Some of those folks were successful enough last year to be flown to a resort in Palm Desert, Calif., for a company-sponsored conference earlier this month. Palm Desert is a luxury enclave known for its warm climate, golf courses, and proximity to Palm Springs.
It’s standard practice in finance to reward top sellers with multi-day events held at posh resorts that combine recognition, entertainment and educational sessions. For example, JPMorgan’s mortgage division is hosting a sales conference in April.
A Wells Fargo spokeswoman said the bank has contacted affected employees, provided severance packages and career counseling and tried to retain as many workers as possible.
“We announced strategic plans in January to create a more focused home loan business,” she said. “As part of these efforts, we have made moves across our mortgage lending business consistent with this strategy and in response to significant declines in mortgage lending volume.”
The bank will also continue to serve customers “in any market in the United States” through its centralized sales channel, she added.
While this latest round of cuts isn’t based on employee performance, Wells Fargo has also cut mortgage workers who don’t meet minimum production standards.
In areas with expensive housing, that could mean at least $10 million in loans over the past 12 months, one of the sources said.
Last month, the bank said mortgage volumes continued to decline in the fourth quarter, falling 70% to $14.6 billion. Wells Fargo said it had nearly 11,000 fewer employees at the end of 2022 than in 2021.
January’s mortgage announcement, first reported by CNBC, led recruiters to swarm the best in hopes of poaching them, according to one of the people.
Scharf addressed employees at a Jan. 25 town hall meeting where he reiterated his rationale for lowering mortgages.