Originator CEO says breakup of 10-year Wells partnership a good move

by Diana Aqra29 Jul 2013

The CEO of Prosperity Mortgage said that the breakup of its 10-year joint-venture with Wells Fargo was “in the best interest of Prosperity’s customers.”

Randy Krout, president and CEO Prosperity Mortgage, based in Washington D.C. area, has told MPA that cutting its ties with Wells and becoming a wholly owned company is an “advantage and will allow the company to be more flexible and nimble,” concerning the types of loans it originates and its execution process.

Wells Fargo announced last week that regulatory issues were pressuring it to end eight joint ventures with correspondent affiliates, including Prosperity, according to an American Banker story.

The decision to cut all JVs was made after months of negotiations between Prosperity’s owners, Wells Fargo and Long and Foster Companies, Krout said. Krout told MPA the decision had nothing to do with regulations.

Prosperity’s ownership was split 50/50 between Long and Foster Companies and Wells Fargo, Krout said. He said Prosperity is now working on winding down that JV structure and creating a new one by January 2014.  The company will keep its name, but it will have new legal ownership.

Krout was the former senior vice president of wholesale lending for Wells Fargo in 2000 to 2001.

COMMENTS

  • by Larry | 7/29/2013 9:09:18 AM

    We all knew that JV's like these were clearly loopholes in the RESPA but allowed to exist because big banks and big real estate firms were involved and along with big business comes big money and we all know what comes with big money...big corruption. Only now does this company say that its right for their customers, only after the Dodd Frank put the hand writing on the wall for them.

  • by A. Adams | 7/29/2013 1:34:15 PM

    Larry, they say the uneducated are prone to believe conspiracies. Fact is the mortgage crisis WAS caused by BIG government...NOT big banks and big real estate firms. They did joint ventures as way to better serve their customers with lower rates and faster closings. IF they can offer better service and rates, they make more $$$. Now maybe to you and to Castro's Cuba making $$ is a bad thing. But if I'm going to fight traffic everyday to get to work, I'm going to make $$. Check your facts before looking like a Kool-Aide drinker. Dodd Frank WILL...WILL raise rates for consumers. Ever heard of G-Fees??? Look it up. There is a good example of "big gubment" at work.

  • by Cory | 7/31/2013 12:01:59 AM

    A. Adams, I disagree. Government created a climate through deregulation that was ripe for Big Banks and Big Lenders like Countrywide, Aurora and Lehman Brothers to create exotic mortgage products like SIVA, SISA, and No-Doc mortgages as well as Option ARM's and sub-prime, and then sell these B and C quality paper to investors as AAA investments. When given the opportunity to have such mortgages the public ate them up. I don't know about you, but I had people calling daily and asking for these mortgages after they saw Countrywide and World Savings ads. And were there LO's who steered clients into stated income and no-doc mortgages just to make the deal happen? Yes, there was.

    The governments role in the crisis was deregulation and not enough oversight of the Big Banks and other players in the game. Given the opportunity to run free without accountability except to stock holders, they did. And the result is what we got.

Poll

Is TILA-RESPA a good or bad thing long term?