The Associated Press is reporting today that Wachovia Bank, the nation’s fourth largest bank in terms of assets, will be shutting down it’s mortgage lending division.
“Wachovia Corp. lost $8.86 billion in the second quarter, and said Tuesday it was slashing its dividend and cutting 6,350 jobs after losses tied to mortgages soared.” In addition, “late Monday, Wachovia announced plans to leave the wholesale mortgage lending business. And beginning Friday, the company will no longer offer mortgages through brokers, joining other lenders making similar moves to exit the troubled sector.”
Any guesses on who is next?
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{ 3 comments… read them below or add one }
Wachovia Corp has been badly hit by the falling market in the US household sector.What they are doing is absolutely rite.
Wachovia is not leaving the mortgage business it is eliminating its wholesale business. It will still sell mortgages but reduce its risk by taking the sales process in-house. There is a big difference between getting out of the mortgage business and eliminating mortgage brokers as a source of new originations.
I don’t see it as bad for the consumer. The best rates are often obtained by calling the lenders directly, as they do not have to pay any fees to the mortgage broker. It will also eliminate mortgage broker fraud.