Wells Fargo confirmed Friday it’s laying off an undisclosed number of home lending employees due to mortgage market conditions, one week after reporting a major decline in origination volume.
The bank in a brief statement didn’t specify which employees were affected nor the amount of staff displaced, and didn’t immediately respond to follow-up questions Friday afternoon.
It’s the third major mortgage player this week to announce cuts in response to sliding mortgage volumes, following embattled lender Better.com and technology firm Blend.
“The home lending displacements this week are the result of cyclical changes in the broader home lending environment,” the bank said in a statement. “The employees affected by these changes have each been an essential part of our success. We are carrying out displacements in a transparent and thoughtful manner and providing assistance, such as severance and career counseling.”
Wells in an earnings report last week disclosed a 33% drop in origination volume, a freefall CEO Charlie Scharf said was “one of the largest quarterly declines that I can remember.” The bank’s net origination income fell to $538 million in Q1 2022 from $1.38 billion over the same period last year. While the lender reported positive servicing income compared to net loss a year earlier, its Q1 2022 mortgage banking income totalled only half the amount it made in the first quarter of last year.
Reports of the layoffs first emerged on social media, where posts indicated the cuts included 550 mortgage processors.
A number of mortgage firms have laid off employees in response to the end of the refinance boom, with Blend cutting 10% of its workers and Better.com shedding over a third of its entire workforce in a series of large layoffs. PennyMac, Interfirst and Guaranteed Rate have also reduced their head counts in recent months.
Wells has also been under fire in the past two months over allegations of discrimination in handling Black homeowner refis. The bank is facing scrutiny from New York City officials and Capitol Hill, and is responding to two federal class action lawsuits.