Wells Fargo is disproportionately in the mortgage business and is much more vulnerable to fluctuations in that market than the other major banks.
To limit that exposure, Wells Fargo is gradually pulling back from various facets of the mortgage business.
The private market tends to react quickly to changing conditions.
Wells Fargo & Co. (WFC), the largest U.S. home lender, said it was exiting the business of reverse mortgages because of the possibility that property values will decline further, displacing as many as 1,000 employees.
“The decision was made based on today’s unpredictable home values,” the San Francisco-based lender said today in a statement distributed by Business Wire.
Reverse mortgages allow retirees to create a lifetime stream of income by tapping the equity in their homes. Lenders are repaid from the sale of the home when the borrower dies or moves. Bank of America Corp., the second-largest U.S. home lender, said in February it was retreating from the business because of “competing demands and priorities” at the Charlotte, North Carolina-based company.
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