Thread regarding Wells Fargo & Co. layoffs

The largest home lender among US banks is hemorrhaging top talent in the midst of one of the hottest housing markets in recent years.
More than 20 top mortgage bankers, or branch and market managers focused on home lending, have left Wells Fargo over the past 12 months, according to people with knowledge of the exits and data from an industry-licensing service. Four members of its so-called President's Club, an honor reserved for the group's top rainmakers, have quit since December, with many of the exits concentrated in key Wells markets — Northern California and New York.
The President's Club represents Wells' top 5% of mortgage bankers, Tom Goyda, a Wells Fargo spokesperson, told Insider.
It's not only producers who have been departing — senior mortgage executives are also leaving as CEO Charlie Scharf, an outside hire and the bank's third chief exec since 2016, reshuffles his leadership ranks. The firm's Denver-based national sales manager for home lending, Liz Bryant, announced her retirement in March after more than 17 years with the bank, and other senior executives including J.R. Russell and Rakesh Sheth have left, as did the senior consumer-lending compliance exec Mani Sulur.
The exits are introducing instability at Wells Fargo, the dominant US bank when it comes to home lending, just as low interest rates and a COVID-19 pandemic-induced buying bo-m have propelled the mortgage market into hyperdrive.
They also highlight the hurdles Scharf has faced as he tries to navigate Wells through what has been a challenging few years for the bank.
Five current and former mortgage bankers told Insider they felt hamstrung by a slew of bureaucratic policies and procedures intended to improve compliance and risk that have made it harder to generate business during one of the frothiest markets in recent memory. These include clunky email-surveillance programs and unwieldy internal investigations. The bankers asked for anonymity to preserve their relationships in the industry.
The policies are a legacy of the bank's infamous fake-accounts scandal in 2016 — in which the bank created millions of fraudulent accounts without customers' knowledge — as well as other problems that came to light once regulators started digging into Wells' operations.
The bank has spent the past five years revamping its risk management, and in February its overhaul plan reportedly received approval from the Federal Reserve , putting it one step closer to removing the asset cap imposed on the bank in early 2018 as punishment.
Wells Fargo is also still under a 2018 consent order from the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau for improperly selling certain mortgage and auto-loan products. Wells ultimately agreed to pay $1 billion in penalties in part over claims the bank had charged fees to extend interest-rate locks, even when delays weren't the fault of customers, and was ordered to revamp its compliance and risk-management controls.
Frustrated ex-employees say that in its zeal to prove to regulators, investors, and employees that it cleaned up its act, Wells Fargo has implemented a host of policies that have limited their ability to do business effectively.
Goyda said the exits are due to the competitiveness of the market for mortgage talent. He declined to comment on the compliance regime.
"We've been in a very competitive mortgage market, and top-producing loan offers are in high demand across the industry," Goyda said. "Wells Fargo has hired top producers from other lenders, and some of our home mortgage consultants have moved to other firms."
But the mortgage bankers say there were other problems to contend with — not least, a star system that lavished special treatment on the mortgage unit's biggest producers that made them difficult to compete with. Sources told Insider that these rainmakers were given resources unavailable to other salespeople and, in years past, allowed to bypass certain steps in the origination process that the bank imposed on other mortgage bankers.
Investigators erode trust
The current and former mortgage bankers who spoke with Insider pointed to excessive red tape, clunky legacy technology, and the Federal Reserve-imposed asset cap as factors that stymied loan growth and led them to quit.
One point of contention was investigators who began to examine the mortgage business.
The investigators are overseen by Michael Cleary, an executive hired by Wells Fargo in February 2020 into a newly created role of sales practices oversight and management.
Cleary, who was co-president at Santander Bank NA, reports directly to Wells Fargo Chief Operating Officer Scott Powell.
One of the bankers took to calling Wells Fargo's investigators the "Stasi," after the East German secret police known for some of the Cold War's most pernicious spying operations, while another former employee referred to it as a "witch hunt."
Cleary's investigators showed up unexpectedly, insiders said. Invites for meetings would appear on salespeople's Outlook calendars without explanation. The invites — warning recipients not to tell managers or anyone else about the meeting and to get to a place they could speak confidentially — provoked anxiety and paranoia, according to two people who received such invites.
During the call, an investigator, or two, would grill the mortgage salesperson about a particular loan file. Why were certain decisions made? Why did the borrower get a below-market rate? Why wasn't the full extent of the borrower conversation documented in the file? Some salespeople have gotten five or more inquiries in a year.
According to three of the people who spoke with Insider, few, if any of the investigations, led to further action.
'A lot of false positives'
In the fall of 2020, the bank also started using a new artificial-intelligence program to monitor employee emails for customer complaints that weren't properly documented, according to the people.
The system was meant to notify managers of unlogged complaints, but it frequently missed the mark. In at least one case, an interaction was flagged that was actually a cordial back-and-forth with a customer, according to the salesperson involved.
Managers, more often than not, would log what the AI program flagged, even if a review proved it wasn't an actual complaint, just to be able to get the task off their desks, two people said.
"There were a lot of false positives," one person said.
Regardless, the system of logging complaints flagged by the AI program began to soak up more time for mortgage salespeople and their managers, leaving less time to close actual loans.
It also made employees afraid to use their emails — driving them to communicate more by phone calls and texts that couldn't be as easily monitored, according to one of the former employees.
Other challenges also added up for the salespeople. It can be difficult to get in touch with the appraisal department if a salesperson has a question, sometimes taking days for an answer, and the bank in recent months has had trouble getting appraisals done on time, one of the people said.
Zach Dawson, who oversaw the department, recently stepped down. The problems stem, at least in part, the person said, from Wells Fargo's decision to switch vendors. The bank also seems unwilling to pay up for appraisers, who are in high demand across the industry.
"Appraisal delays have been a challenge across the industry, as mortgage applications have soared to record levels," said Goyda, the Wells Fargo spokesman. "The shortage of experienced, quality-focused appraisers is particularly acute in certain areas that are experiencing exceedingly high demand."
In places where the bank sees process issues creating a backlog, it works to address those, he said.
An initiative to open a center for appraisals in the Philippines several years ago to save costs didn't work, and the bank reversed course, a move that cost millions, one of the people said.
Wells Fargo's distrust of new technologies also didn't help. The bank doesn't allow mortgage borrowers to use DocuSign to electronically sign documents and forbids use of sharing sites like Dropbox, Box, or Google Drive to upload documents — instead pushing borrowers to its proprietary portal, which can be clunky to use, one of the people said.
Two people said Wells Fargo's strict social-media policies significantly hampered loan officers' ability to market themselves. A marketing program managed by Hearsay Systems doesn't let them customize their outreach on platforms like LinkedIn, one of the people said, though it does let them send out generic greetings. For example, the person said, "Happy Easter."