Turn up the volume on your real estate success at Inman On Tour: Nashville! Connect with industry trailblazers and top-tier speakers to gain powerful insights, cutting-edge strategies, and invaluable connections. Elevate your business and achieve your boldest goals — all with Music City magic. Register now.

Wells Fargo could be poised for a comeback in the mortgage business this year as it continues to make progress with regulators in addressing concerns about its past business practices.

Once the nation’s largest mortgage lender, Wells Fargo was overtaken by direct lender Rocket Mortgage (then known as Quicken Loans) in 2017 and has since fallen out of the top 10 as it copes with regulatory issues, a shrinking branch footprint and rising interest rates.

In 2022, Wells Fargo agreed to pay $3.7 billion to settle allegations by the Consumer Financial Protection Bureau (CFPB) that it harmed millions of consumers over a period of several years through widespread mismanagement of mortgages, auto loans and deposit accounts.

TAKE THE INMAN INTEL INDEX SURVEY FOR JANUARY

In addition to providing home loans, Wells Fargo is also a major loan servicer, collecting monthly payments from homeowners on behalf of mortgage investors. The CFPB alleged that for at least seven years, Wells Fargo improperly denied thousands of mortgage loan modifications, in some cases leading customers to lose their homes.

In 2021, Wells Fargo agreed to pay a $250 million fine to another federal regulator, the Office of the Comptroller of the Currency, which found fault with the bank’s practices for helping homeowners having trouble paying their mortgages.

Advertisement

Like other lenders, Wells Fargo saw business boom during the pandemic, as homeowners rushed to refinance when mortgage rates plummeted to historic lows. Wells Fargo originated $223 billion in mortgages in 2020, more than 10 times as much business as it did last year ($20.2 billion).

Part of that decline is attributable to the end of the pandemic-era boom in refinancing. As mortgage rates rebounded, total U.S. mortgage originations plummeted by 63 percent — from a peak of $4.57 trillion in 2021 to $1.69 trillion last year, according to data tracked by Fannie Mae.

But much of Wells Fargo’s diminished role in the mortgage business has been by choice, as the bank prioritized higher margin businesses like credit cards.

In 2023, the bank announced it would no longer buy mortgages from correspondent lenders as part of a strategy to better serve the bank’s customers and minority communities. Correspondent lenders — typically smaller institutions who originate and fund their own loans, then resell them to bigger lenders or investors — accounted for 47 percent of Wells Fargo’s 2020 loan production.

Before shutting the channel down, Wells Fargo executives had concerns about the financial and reputational risk posed by the correspondent lending business, Bloomberg reported.

Charlie Scharf

“We’re not interested in being extraordinarily large in the mortgage business, just for the sake of being in the mortgage business,” Wells Fargo CEO Charlie Scharf said on a 2022 earnings call. “We’re in the home lending business because we think home lending is an important product for us to talk to our customers about. And that’ll ultimately dictate the appropriate size of it.”

Wells Fargo’s credit card business brought in more revenue in Q2 2022 than home loans, and bank executives said they were fine with that.

More recently — on the bank’s Jan. 15 Q4 2024 earnings call — Scharf said Wells Fargo had reduced the headcount in its home lending business by 47 percent since announcing its new strategic direction in 2023.

Wells Fargo closing branches, growing digital customer base

Retail bank branch and digital customer count at the beginning of the year. Source: Wells Fargo earnings reports.

Wells Fargo ended 2024 with 4,177 retail bank branches, down 22 percent from 5,352 at the beginning of 2020.

But the nation’s biggest lenders, UWM and Rocket Mortgage, are investing heavily in technologies including artificial intelligence. Those investments, they say, will allow them to rapidly scale up lending if business booms — without going on hiring sprees.

Although Wells Fargo declined to comment for this story, it may also be in a position to grow its mortgage business, even with its reduced branch office footprint and staffing levels.

In reporting fourth quarter earnings, Wells Fargo said it has grown the number of customers who access the bank online or through mobile devices by 19 percent since the beginning of 2020, to 36 million.

Scharf told investment analysts on the call that Wells Fargo’s mortgage business “is more profitable today, and opportunities remain to improve.”

“After several years of little to no growth as we focused on satisfying the requirements of our consent orders, we are starting to generate growth and increase customer engagement in our consumer, small and business banking segment,” Scharf said.

On the same earnings call, Wells Fargo CFO Mike Santomassimo noted that Q4 2024 retail mortgage originations were up 31 percent from a year ago, thanks to higher purchase loan volume as well as stronger refinance volume early in the quarter when interest rates were lower.

But mortgage lending “will likely continue to decline a little bit given the rate environment we’re in,” Santomassimo advised. “We did see a little bit of incremental refinance activity in the fourth quarter. But now, with rates back up, that seems to be back down again.”

Get Inman’s Mortgage Brief Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.

Email Matt Carter

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×