Wells Fargo dials back mortgages, servicing

Wells Fargo & Co., announcing a “new strategic direction” for a mortgage empire that was once the largest in U.S. banking, said it will stop funding home loans arranged by outsiders and shrink the portfolio of debts that it services.

The retreat from so-called correspondent lending and reduction in servicing caps years of efforts to clean up a business that entangled Wells Fargo in regulatory probes and lawsuits.

While dialing back those operations, the firm said Tuesday it will expand a program launched in 2022 to help minority homeowners. That will include investing an additional $100 million to advance racial equity in homeownership and “ongoing investments in this area in the years to follow,” the San Francisco-based lender said.

“We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus,” Kleber Santos, the firm’s head of consumer lending, said Tuesday. “As the largest bank lender to Black and Hispanic families for the last decade, we remain deeply committed to advancing racial equity in homeownership.”

The new racial-equity initiative replaces a target Wells Fargo set more than a half-decade ago for supporting minority homeownership.