Wells Fargo & Co. is shrinking its home mortgage division, which has a sizable presence in the Twin Cities, and cutting jobs in the process, a spokesman acknowledged Tuesday.
Wells Fargo, the nation's third-largest bank, for years has led other banks in home mortgage volumes and, a decade ago, accounted for one of every four new home loans in the country.
But its market share has been sliding for years against independent mortgage companies like Rocket Cos. And now with the steady rise of interest rates, loan originations and refinancing have slowed significantly. The Mortgage Bankers Association forecasts a 41% drop in the value of mortgage originations this year.
On Monday, Bloomberg News cited a senior executive anonymously as saying that San Francisco-based Wells Fargo is no longer committed to ranking first in the business among banks.
Tom Goyda, a Wells Fargo spokesman, told the Star Tribune on Tuesday, "Like others in the industry, we're evaluating the size of our mortgage business to adapt to a dramatically smaller originations market."
The home mortgage division is based in Des Moines and is the largest private employer in that city. It also has hundreds of employees at a building in south Minneapolis and other locations in the Twin Cities.
Goyda declined on Tuesday to provide a precise number of employees for the division in the Twin Cities nor how many would be affected by job cuts.
"We are carrying out displacements in a transparent and thoughtful manner and providing assistance, such as severance and career counseling," Goyda said in an e-mail. "Additionally, we are committed to retaining as many employees as possible and have had good success identifying opportunities and transferring them into other roles within Wells Fargo."
Wells Fargo originated $205 billion in home loans last year, down from $222.7 billion in 2020.
Mike Santomassimo, Wells Fargo's chief financial officer, told investors last month that executives expected the mortgage market to remain challenging in the near term.
"We are making adjustments to reduce expenses in response to lower origination volumes, and we expect these adjustments will continue over the next couple of quarters," he said.