Wells Fargo Profits Plummet Amid Fraud Scandals And Added Competition. Is The End Near For Wells Fargo?
Wells Fargo CEO Tim Sloan was forced to admit Wells Fargo profits are plummeting. He also admitted Wells Fargo is struggling. The bank has also been plagued by countless fraud scandals, lawsuits, and fines.
Sloan also admitted Wells Fargo is struggling with the mortgage fees it charges as competition continues to increase.
As a result, Wells Fargo customers are fleeing the bank in droves.
Wells Fargo CEO Tim Sloan downplayed the situation:
Wells Fargo explained it has also seen more of a shift into the correspondent channel as competition rises.
Wells Fargo Isn’t The Only Lender In Trouble
But Wells Fargo isn’t the only company struggling. Other lenders are feeling the pinch of rising levels of competition. Wells Fargo profit margins and those of other lenders have shrunk dramatically. Competitors are fighting for the diminishing market share of originations. Banks are also facing another crisis. Mortgage originations are at a 17-year low.
Mortgage Bankers Association Economist Mike Fratantoni said mortgage refinances are falling and purchase originations are unable to make up the difference. He said lenders will also see their profits go negative in the first quarter this year.
Movement Mortgage announced Thursday it will lay off 100 of its employees today. The darling of the lending industry faces lower originations and slower growth than it expected. This is the second time this year that Movement Mortgage has trimmed its staff.
Merger and acquisition activity has also picked this spring. HousingWire Editor-in-Chief Jacob Gaffney recently revealed three new partnerships in mortgage lending that will help improve the digital mortgage.