By Stephen Nakrosis
WaFd said it was exiting the single-family mortgage lending market, saying it no longer feels it can offer products and services to customers where it can add value in the mortgage sector.
WaFd said Thursday it will retain all existing home loans and HELOC's on its books.
The company said home loans are seen as a commodity, with nearly 70% of originations sold to enterprises like Freddie Mac and Fannie Mae, which has caused a decrease in profitability and an increase in credit risk. WaFd said that while technology has made it easy for consumers to refinance, it increases the interest rate risk for banks that hold mortgages. The company also cited the regulatory burden associated with mortgage lending as a factor in its decision.
The exit from mortgage lending and right sizing other support areas will result in an 8% reduction in workforce, the company said. WaFd also said it recorded a restructuring expense of $5.4 million this quarter, and expects annual expense savings of approximately $17 million by the end of June.
In addition to serving consumers, WaFd said, it will concentrate on business banking and commercial real estate lending and also begin offering SBA lending products.
WaFd also announced changes to its management structure. Cathy Cooper was named chief experience officer, James Endrizzi will assume leadership responsibility for Commercial Real Estate in both Utah and Nevada in a non-executive role, and the Business Bank Division will be led by Michelle Coons, Dan LaCoste and Doron Joseph.
WaFd is the parent company of Washington Federal Bank.
Write to Stephen Nakrosis at stephen.nakrosis@wsj.com
(END) Dow Jones Newswires
January 16, 2025 17:56 ET (22:56 GMT)
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