Just months after cutting back its wholesale lending business, Fifth Third Mortgage is closing down the entire wholesale division. The current regulatory environment was cited.
Beginning last summer and continuing into the winter, the Cincinnati-based company laid off wholesale lending employees in Charlotte, N.C.
The job cuts were made in response to a drop in refinance originations. Overall mortgage production plunged to $2.6 billion in the fourth quarter from $7.0 billion a year earlier.
Now Fifth Third is giving up entirely on its mortgage broker business.
In a letter to wholesale clients, Fifth Third Mortgage President Bob Lewis said that the company will exit the wholesale business.
“Fifth Third conducts regular reviews of the industries we serve based on the changing competitive and regulatory environment,” the letter stated. “Based on the current environment, and after careful consideration, we have decided to exit the wholesale business and focus third party origination on correspondent lending.”
The letter said that residential wholesale loan broker agreements are being terminated on March 14. New loan registrations will be accepted until that date, and new applications will be accepted until March 31.
Lewis noted that Fifth Third will focus instead on building its correspondent lending business, which acquires loans from smaller financial institutions and independent mortgage companies.
A spokesman didn’t immediately respond to questions about impacted employees.
One company that hopes to capitalize on the Fifth Third’s decision is United Wholesale Mortgage, which claims to be the nation’s largest wholesale originator.
“Fifth Third’s absence provides new opportunities for companies like UWM, and we are well-staffed and well-prepared to increase business and effectively service new brokers,” United Wholesale President and Chief Executive Officer Mat Ishbia said in a written statement. “We take pride in delivering innovative technology, exclusive features and products, and world-class client service to our broker partners.”
