Wells Fargo has announced that it will drastically constrict its jumbo mortgage program amid the market turmoil caused by the COVID-19 outbreak.
Wells Fargo will only refinance only refinance jumbo mortgages for customers who have at least $250,000 in liquid assets with the bank, according to a Wall Street Journal report. With the new policy, customers who have jumbo mortgages with Wells Fargo won’t be able to refinance unless they have money with the bank. Wells Fargo hasn’t changed policies for purchase loans, according to the Wall Street Journal.
“These difficult business decisions reflect efforts to prioritize how we serve customers and maintain prudent balance-sheet discipline,” a bank spokesperson said.
Wells Fargo also said last week that it would stop purchasing jumbo loans made by third-party mortgage bankers.
Wells Fargo was the largest lender for jumbo loans last year, posting $70 billion in volume, the Journal reported.
While conventional, GSE-backed loans are still widely available, loans without government backing – including jumbo loans – have become harder to get as investors lose their appetite due to the recent market fluctuations, according to the Journal. Several non-QM lenders, including Angel Oak Mortgage Services and Citadel Servicing Corp., have temporarily halted originations.