Wells Fargo Home Mortgage will no longer accept subprime business from mortgage brokers.
The Des Moines, Iowa-based company made the disclosure in a press release today. The move will result in about $6 billion in lost business based on 2006 figures.
The company said it will continue to offer nonprime programs through in-house originators, while it will still accept conforming business from brokers.
"For the foreseeable future, we believe continued turmoil in the nonprime sector will result in financial returns for our nonprime wholesale channel that are not commensurate with the risks inherent in this business," Cara Heiden, president of the mortgage unit, said in the announcement.
About 170 jobs in Baton Rouge, La., and Des Moines will be cut as a result of the closure. Wells will try to find other jobs for the 67 employees in Iowa, where it employs 11,700 people. Across all of Wells Fargo & Co., there are approximately 168,000 employees.
Earlier this month, the company told MortgageDaily.com it would shutter prime wholesale operations in six cities throughout Arizona, California, Florida, Oregon and Pennsylvania. That move was expected to affect less than 250 employees.
Wells shut down its subprime correspondent business in June -- resulting in just 13 layoffs. Earlier this year, Wells eliminated 320 California and South Carolina jobs.