Top Mortgage Producers at Wells Fargo Are Leaving in Droves

  • More than 20 top mortgage lenders at Wells Fargo have left in the past year, while four of the bank’s elite President’s Club members have left since December.
  • Insiders described a culture of heavy oversight and clunky technology that limited their ability to do business. 
  • The most high-valued producers received special treatment, they said, while others found it difficult to compete.
  • See more stories on Insider’s business page.

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 boom 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.”

A ‘parabolic move’ in the market

To some degree the Wells Fargo exits are tied to the cycle, analysts said. 

Low rates and fat profit margins have increased the ability of nonbank lenders like Guaranteed Rate and LoanDepot to poach talent, adding a tailwind to some of the exits. 

“2020 for mortgage issuers was a parabolic move in the market, almost hyperbolic,” said Ken Leon, director of equity research at CFRA, adding that the type of growth seen last year at competitors like Rocket Mortgage will be “very difficult to duplicate.”

Despite the departures, Wells Fargo’s mortgage revenue jumped 19% over the previous year as first-quarter origination volume reached its highest level in five years. Wells’ biggest bank competitor in mortgages, JPMorgan Chase, turned in a 26% increase. But US Bank reported a 24% decline in mortgage revenue across residential and commercial lending. 

And at Wells’ biggest nonbank competitor, Rocket Companies, net revenues surged 236% over the same period last year, though the figure doesn’t break out how much of that came from home lending. 

Wells Fargo originated about $54 billion in mortgages in the fourth quarter, good enough to rank fourth nationally, according to data compiled by Bloomberg. The first three spots were taken up by nonbank

mortgage lenders
, accounting for almost $240 billion among them. Lower down the rankings, LoanDepot did $37 billion, while Guaranteed Rate did about $24 billion.  

The question then, according to Leon, is, “Can they still take their numbers higher if loan volume is going to be lower?”

Mortgage bankers bear the brunt of the asset cap

Wells Fargo’s conservative underwriting guidelines have also hampered mortgage bankers, who found it difficult to compete against other players in the market, sources said.

In San Francisco, for example, Wells Fargo insisted borrowers needed 25% down to get a condominium mortgage up to $2 million, one of the people said. While other lenders made similar adjustments for COVID-19, they were typically temporary. Wells Fargo’s policy remains in place, the person said. 

Around June, Wells decreed that borrowers couldn’t use rental income on a second or third property when calculating their affordability for loans that are too big to qualify for Fannie Mae or Freddie Mac, the person said. Both policies meant losing business to crosstown rivals like Guaranteed Rate or LoanDepot. In March, Wells Fargo reversed that decision. 

Goyda said Wells Fargo made the changes as part of prudent risk-management practices. 

“As the pandemic unfolded last year, for example, we made a few changes to underwriting criteria for nonconforming loans that we believe best served the interests of our customers for the long term and addressed concerns related to health and safety, credit and market risks, and prudent balance-sheet management,” he said.

Three people who spoke to Insider said they think the bank’s decision to set higher bars — which slowed the pace of loan growth for some bankers —  was directly related to the asset cap that the Federal Reserve imposed on the bank in 2018. 

No one said that Wells Fargo managers or executives specifically blamed the asset cap for keeping policies that put the bank at a disadvantage to other lenders. But top producers’ jumbo mortgages were too big to be sold to Fannie Mae or Freddie Mac, meaning they were often housed on the bank’s balance sheet. 

The difficult task of righting the massive ocean liner that is Wells’ consumer business has fallen to Mary Mack, who’s been with the firm for more than 35 years and took charge of the consumer and small-business banking division after a stint leading the bank’s retail brokerage. 

Mack ran consumer lending in addition to consumer banking for a number of years before handing off oversight of the consumer lending to Mike Weinbach, who was hired in February 2020 after more than 16 years in home lending and other roles at JPMorgan Chase.

Some of these exits, then, are likely attributable to the turnover within the highest rungs of Wells Fargo’s leadership. Charles Elson, a finance professor at the University of Delaware specializing in corporate governance, said that at any institution emerging from scandal, turnover would naturally be highest within the divisions where issues were most endemic. 

And at Wells, of course, this was in the bank’s consumer business.  

“You reshuffle leadership. You’ve freed a lot of people below to move in different directions,” Elson told Insider. “You’ve upset the status quo.”

Preferential treatment for top producers

Kristy Williams Fercho took over the bank’s home-lending division in August, replacing Michael DeVito, a 23-year veteran of the bank. Fercho’s arrival wasn’t enough to stem the exits in the first few months of 2021. 

Fercho has overseen some process improvements this year that Goyda said were intended to address some of the concerns that loan officers had raised. The bank set up a new “retail operations structure” intended to close loans more quickly with fewer problems. 

“We want our home-mortgage consultants to be successful in their jobs and are continuously working to improve the underwriting and fulfillment operations that support them in serving our customers,” Goyda said. “In just the first few months, those changes already are making a difference.”

Producers say that the administrative, compliance, and underwriting policies weren’t their only source of frustration, however. The bank was sometimes more lax in enforcing policies with some top producers, three of the people said.

Management drew a clear line in the sand between the highest-value producers within home lending at Wells Fargo — who might make several hundred thousands of dollars a month in commissions — and everyone else, according to one person.

There were also at least two people who were able to maintain their own book of business and clients despite also serving as a branch manager, the person said, a practice that was banned seven years ago.   

$1 billion in annual production

At the very top of the hierarchy is Alber Saleh, a salesman in Marin County, California, who originates $1 billion a year in mortgages as Wells Fargo’s top producer, according to one person. Saleh joined Wells when Washington Mutual collapsed in 2008. 

According to some former employees, Saleh enjoys preferred access to underwriters and a lending officer. Everyone else has to use a pool of underwriters who are often overworked and can be slow to process loans. 

Goyda acknowledged that top producers may get access to company resources unavailable to other salespeople: “Our highest-producing HMCs may receive additional marketing and administrative support, depending on their production level.”

But Goyda said all producers, even the most successful, are “held to the same quality, service, pricing and compliance standards.”

Nonetheless, the former salespeople whom Insider spoke to chafed at the preferential treatment they interpreted as being showered on favorite producers. “They have their favorites that are pretty sheltered,” one of the people said. “If you are in one of those sweetheart deals, you don’t have to go through the normal channels.” 

Julian Hebron, founder of The Basis Point, a strategy consultancy to banking, housing, and fintech firms and a former Wells Fargo executive, acknowledged that banks might give preferential treatment to top producers by allowing them to more quickly cut through layers of bureaucracy. But at the end of the day, the underwriting decision should be the same regardless of who’s originating the loan, he said. 

Ultimately Hebron said he expects some of the migration of loan officers away from banks like Wells Fargo will reverse in the coming years. 

The tailwinds buoying the trend aren’t likely to persist as a favorable backdrop reverses for nonbank lenders, he said. And as rates increase and profit margins shrink, Wells Fargo’s bank deposits will provide a cheaper source of funding. And if the Fed lifts the asset cap, as it has told the bank it could do, that might also make Wells a more attractive place to work.

“Some loan officers in high-priced markets who left big banks for nonbanks will return,” Hebron said. “The honeymoon will end.”