Wells Fargo mortgage referral business dragged down by scandal

by Ryan Smith17 Jan 2017
Wells Fargo’s fake-account scandal has had wide-ranging repercussions for the bank – and now it’s putting a damper on its mortgage referral business.

Wells Fargo President and CEO Tim Sloan said the scandal was hampering the business in an earnings call, according to HousingWire. Sloan said that “lower bank referrals continue to affect businesses such as mortgage.”

Referrals made up about 9% of Wells Fargo’s mortgage originations in 2016, HousingWire reported. Sloan said on the earnings call that lower referrals were expected to cut into first-quarter funding volume by about 2.5%.

Mortgage referral isn’t the only thing that’s taken a hit at Wells Fargo since the scandal broke last year. The bank’s former CEO, John Stumpf, was forced to step down, and the bank had to pay $185 million in penalties.
Wells Fargo also missed its projected Q4 earnings, the bank announced last week.

Wells Fargo’s mortgage banking results dropped by $250 million from the third to the fourth quarter, according to HousingWire. That includes a $163 million drop in mortgage servicing income driven largely by higher costs.

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