Palm Spring Deserts, California
Lonely Planet
Wells Fargo laid off hundreds of mortgage bankers this week as part of a sweeping round of cuts triggered by the bank’s new strategic shift, CNBC has learned.
The layoffs were announced Tuesday and hit several top producers, including several bankers who exceeded $100 million in loan volume last year and who recently attended an internal sales conference for high achievers, according to people familiar with the situation.
Under CEO Charlie Scharf, Wells Fargo is retreating from its share of the U.S. mortgage market, an arena it once dominated. Instead of trying to expand home lending in America, the bank is focusing more on serving existing minority customers and communities. The shift comes after higher interest rates led to a collapse in loan volume, forcing Wells Fargo, JPMorgan Chase and other players to cut thousands of mortgage positions in the past year.
Those cut this week at Wells Fargo include mortgage bankers and home loan consultants, a workforce spread across the country that compensates largely in terms of sales volume, according to the people, who declined to be identified over personnel issues.
The firm is cutting bankers who work in areas outside of its former branches and therefore don’t fit into its new strategy of catering to existing customers, the people said. That includes bankers in the Midwest and East Coast, one of the people said.
Palm Desert Resort
Some of them were successful enough last year to be flown to a resort in Palm Desert, California, for a company-sponsored conference earlier this month. Palm Desert is a luxury enclave known for its warm weather, golf courses and proximity to Palm Springs.
It is common practice in finance to reward top salespeople with multi-day events held at luxury resorts that combine recognition, recreation and education sessions. For example, JPMorgan’s mortgage division held a sales conference in April.
A Wells Fargo spokeswoman said the bank has been communicating with affected employees, offering severance and career guidance, and trying to retain as many workers as possible.
“We announced a strategic plan in January to create a more focused home loan business,” he said. “As part of these efforts, we have made moves in our home loan business that are in line with this strategy and in response to the significant decline in mortgage volumes.”
The bank will also continue to serve customers “in any market in the United States” through a centralized sales channel, he added.
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While these latest cuts aren’t based on employee performance, Wells Fargo has also cut mortgage workers who don’t meet minimum production standards.
In an area with expensive housing, it may have at least $10 million in loans in the past 12 months, one of the sources said.
Last month, the bank said its mortgage volume continued to shrink in the fourth quarter, falling 70% to $14.6 billion. The company will have nearly 11,000 fewer employees by the end of 2022 than in 2021, he said.
The January mortgage announcement, which was first reported by CNBC, led recruiters to besiege top performers in hopes of stealing them, according to one of the people.
Scharf told employees at the January 25 town hall meeting that he reiterated his rationale for mortgage retrenchment.