Wells Fargo & Co. said Thursday that it will exit from eight joint ventures that make home loans, eliminating 300 jobs, saying changes in government oversight have made the partnerships more difficult to operate.
Subsidiary Wells Fargo Ventures LLC plans to wind down the joint ventures over the next 12 to 18 months.
Wells Fargo, the nation’s biggest mortgage lender, has more than 270,000 employees. It said leaving the partnerships won’t affect its commitment to its own mortgage business. The joint ventures accounted for 3 percent of Wells Fargo’s mortgage production in the second quarter, the company said.
The lender said that it decided to exit the business partnerships given the current market environment and because of the growing complexity and difficulty in operating the ventures amid changes in state and federal oversight of mortgages.
The government ramped up scrutiny of mortgage lenders in the years following the 2007 mortgage meltdown that ushered in the housing downturn. The industry also has been the target of lawsuits and investigations over their lending practices.
Last year, the federal government and state attorneys general for 49 states forged a $25 billion settlement with Wells Fargo and four other major lenders over allegations that many banks processed foreclosures without verifying documents.
Mortgage rates have also risen in recent weeks, although they remain low by historical standards. Super-low rates have contributed to a housing recovery that has helped drive economic growth this year. Some investors have been concerned that higher interest rates could hold back the pace of the housing recovery.
The ventures that Wells Fargo will be exiting are: Bankers Funding Company LLC; Colorado Mortgage Alliance LLC; DE Capital Mortgage LLC; Home Services Lending LLC; Military Family Home Loans LLC; Prosperity Mortgage Co.; Premia Mortgage LLC and Private Mortgage Advisors LLC.
The lender said it doesn’t expect its departure from the ventures will have an impact on customer service or loan processing.
Shares of Wells Fargo, which is based in San Francisco, ended regular trading down 66 cents at $43.65. The stock is up 28 percent this year.