Wells Fargo & Co. late Wednesday said it would shutter all of its 638 consumer finance stores and cease production of nonprime mortgage loans that went into the unit's portfolio. Roughly 3,800 full timers will lose their jobs.
At press time it was unclear how many nonprime loans the Wells Fargo Financial stores were producing but a statement issued by the bank said less than 2% of its real estate loans came from the division in the first quarter.
According to figures compiled by National Mortgage News, all Wells units originated $77 billion of one- to four-family mortgages in 1Q, ranking first nationwide. If the 2% figure is applied that means Wells Fargo Financial stores originated roughly $1.5 billion in mortgage-related products. But it's unclear how many of those were nonprime in nature.
A spokeswoman had not returned a telephone call at press time.
"Our network of U.S.-based consumer finance stores, which have historically operated as an independent sales channel from our bank operations, have served customers well for more than 100 years," David Kvamme, president of Wells Fargo Financial, said in a prepared statement, "but the economics of a separate Wells Fargo Financial channel are no longer viable, especially now that our customers have access to the largest banking and mortgage store network in the United States."
In 2008 Wells bought the struggling Wachovia Corp., which boosted its retail presence throughout the nation. The bank said the restructuring of Wells Fargo Financial will not impact its community banking and home mortgage stores currently in operation. The branch closings and layoffs will cost the bank $185 million.