Wachovia Exits Wholesale Lending
July 22, 2008
In a surprise move, Wachovia has exited the wholesale lending business. Once one of the largest players in the wholesale mortgage industry, Wachovia has decided it no longer can stay competitive in the industry. California interest rates were not affected by this decision. This follows a recent wave of news stories to hit Wachovia including the recent Wachovia raid and their decision to no longer offer the Wachovia Pay-Option-Arm program.
In a prepared statement late Monday afternoon, a Wachovia spokesman said:
"Wachovia Mortgage has evaluated our business model in the context of the current market and recognized some opportunities to reposition our business. We believe it is important to focus on serving the needs of customers who have relationships with the bank, and who are located in geographies where Wachovia franchises are located.
"Based on our decision to focus on building relationship banking customers, we have decided to discontinue doing business through our wholesale mortgage channel after July 25."
The company has lost a significant amount of money over the last 3-6 months and is trying to reduce costs and the amount of debt it carries. Wachovia recently purchased Golden West Financial, a major player in the California Home Loan market, and since then everything has been down hill. Their stock price, earnings and image have taken a beating. The CEO has been replaced and Wachovia is doing everything it can to sure up it's balance sheet.
Their exit follows the exit of Bank of America from wholesale lending. Many loan professionals expect to see more large and medium sized banks exit the wholesale loan business and the mortgage mess continues.
Wachovia announced they are in the process of laying off employees however declined to comment on the total number. Some analyst of speculated the number could be above 10,000.00
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