Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

There are concerns that Wells Fargo will need to cut more employees as the U.S. housing slump deepens due to the fact that mortgage volumes at the lender have slowed further.

According to people with knowledge of the company's figures, the bank had 18,000 retail loans in the first few weeks of the fourth quarter. People who spoke about internal matters said that that was down as much as 90 percent from a year earlier.

The U.S. housing market took off in 2020 thanks to easy-money policies and the adoption of remote work, but slowed down this year as the Federal Reserve boosted rates. The pace of homebuying has been squeezed and the cost of a 30-year loan has gone up. The Fed is expected to raise its benchmark rate on Wednesday.

The situation has put pressure on the home loan industry and is expected to lead to consolidation among newer non-bank players that rushed to serve customers after most U.S. banks retreated from the market.

Wells Fargo has historically been the most dependent on mortgage loans. Charlie Scharf, the bank's CEO, has said that the bank wants to shrink the business and focus on serving existing customers.

The bank warned investors that the housing market could slow further after it said that mortgage originations fell in the third quarter.

CFO Mike Santomassimo told analysts that he expected it to remain challenging. There is a chance that we have a further decline in mortgage banking revenue in the fourth quarter.

After the bank began cutting workers in April, employees are on edge. Local news outlets have reported that Wells Fargo offices have to tell the public about job cuts in a town.

According to one of the people, the ranks of mortgage loan officers are expected to fall to under 2,000 from 4,000 at the beginning of the year. This person said that many salespersons haven't closed a loan in a while.

Most voluntary exits have been voluntary as bankers seek other opportunities, making departures and staffing levels hard to predict, according to another person.

A spokesman for Wells Fargo said that the changes they have recently made are in line with the response of other banks. Staffing levels are reviewed and adjusted to match market conditions.

In the third quarter of the year, the bank's total workforce fell by about 7,000 people.

Since the beginning of the year, Wells Fargo shares are down.