Wells Fargo & Co (NYSE:WFC) has issued a statement through Business Wire saying that it will exit all eight of its joint ventures in mortgage lending. The decision takes effect immediately, and the bank expects to finish its withdrawal within the next 12 to 18 months.
Wells Fargo backs out of joint ventures
The bank does not believe its loan processing or customer service will be affected by the withdrawals. Wells Fargo & Co (NYSE:WFC) based its decision to withdraw from the ventures on “the current regulatory and market environment.” The bank stated that changes in both federal and state oversight have made it more complex and difficult to run mortgage joint ventures.
According to the statement, each joint venture operates independently, so the impact Wells Fargo’s withdrawal will have on each one will vary. At the end of June, the joint ventures made up about 3 percent of Wells Fargo & Co. (NYSE:WFC)’s mortgage production.
The bank said 300 employees will be impacted by the decision, which it said doesn’t affect its Retail and Correspondent mortgage businesses.
A list of the joint ventures affected
Wells Fargo & Co (NYSE:WFC) listed the eight joint ventures as: Bankers Funding Company, LLC; Colorado Mortgage Alliance, LLC; DE Capital Mortgage, LLC; Home Services Lending, LLC; Military Family Home Loans, LLC; Prosperity Mortgage Company; Premia Mortgage LLC; and Private Mortgage Advisors, LLC.
The banks said joint venture customers who currently have a mortgage loan application that’s pending may call their consultant if they have questions, although the applications will continue to be processed by the joint venture.
Berkshire to take over HomeServices Lending
At this point it’s unclear about what will happen to these joint ventures, although the fate of one is clear. Warren Buffett’s Berkshire Hathaway Inc (NYSE:BRK.A) (NYSE:BRK.B) will take over Wells Fargo’s half of HomeServices Lending, which it operates along with the bank. That’s according to a report from BloombergBusinessweek’s Noah Buhayer and Dakin Campbell.
By the end of next year, HomeServices Lending will be a subsidiary of HomeServices of America, which is part of Berkshire Hathaway. The terms of the deal were not disclosed.