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 . 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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