U.S. Bank inherited a wholesale lending business. It’s shutting it down

Minneapolis-based U.S. Bank has decided to close the wholesale mortgage businesses it inherited in the acquisition of California-based MUFG Union Bank, the company confirmed on Friday. 

“This is a business that U.S. Bank exited a few years ago to focus on customer relationships in core lending categories,” a spokesperson for U.S. Bank wrote in a statement to HousingWire. “These decisions are never easy; however, U.S. Bank is committed to transparency and clarity for all employees and therefore communicated this decision as soon as possible to impacted employees.”

The spokesperson for U.S. Bank did not provide further details, such as the number of employees affected. National Mortgage News first reported on the wholesale closure.

U.S. Bank is the eighth-largest mortgage originator in the U.S., according to Inside Mortgage Finance (IMF) data. Amid surging rates, its total origination reached $45.7 billion from January to September, down 40.5% compared to the same period last year. 

The bank is well positioned in retail and correspondent lending and tries to maintain a balanced portfolio between both channels.  

From January to September, U.S Bank was the ninth largest U.S. mortgage company in the retail channel, with a $25.4 billion volume, down 35.2% year over year. The depositary lender also produced $20.3 billion through the correspondent channel in the nine months of 2022, down 46% compared to the same period in 2021. 

U.S. Bank, owned by U.S. Bancorp, closed the acquisition of MUFG Union Bank’s core regional banking franchise from Japan-based Mitsubishi UFJ Financial Group at the beginning of December after receiving all required regulatory approvals in October. The transaction adds 1 million consumers and about 190,000 small business customers on the West Coast. 

The acquisition brought a wholesale mortgage division, not part of the U.S. Bank’s current strategy. IMF estimates MUFG Union Bank originated $4 billion in wholesale volume from January to September, up 63.4% compared to the same period last year. 

The wholesale channel has been a hostile space for lenders this year. 

Like other channels, it has been affected by surging mortgage rates and shrinking origination volumes. But it has an added challenge: a competitive pricing strategy initiated by channel leader United Wholesale Mortgage (UWM). UWM in June launched the ‘Game On’ pricing initiative, slashing prices across all loans by 50 to 100 basis points. 

Rivals such as loanDepot, Mountain West Financial, AmeriSave, Point Mortgage Corporation, Stearns Wholesale (owned by Guaranteed Rate), and Finance of America (FoA) have already exited or plan to exit the wholesale channel to focus on more profitable business divisions.