U.S. Bank ending newly acquired Union Bank’s wholesale lending

U.S. Bank is ending the wholesale mortgage business at newly acquired MUFG Union Bank, making it the latest player in the space to pull back amid the market’s decline this year.

The large Minneapolis-based depository made the announcement shortly after its $8 billion acquisition of MUFG Union Bank closed last week, citing a review of consumer lending operations at the company in the past year as the transaction was pending.

“This decision is consistent with the strategy U.S. Bank embarked on several years ago to focus more on Retail, Correspondent and HFA lending,” the company said in a statement this week to clients.

The company said it communicated the decision as soon as possible to impacted employees, although it did not confirm whether layoffs would occur.

The last day to register loans is Dec. 14, loans will be funded through Feb. 17, 2023, according to the announcement.

Independent mortgage banks small and large have exited wholesale operations in the past few months, including Finance of America and loanDepot which wrapped up their pipelines in October. Other mortgage firms shutting the channel down include AmeriSave Mortgage Corp., Mountain West Financial and Guaranteed Rate, which closed its Stearns Lending arm at the beginning of the year. 

U.S. Bank itself exited the wholesale channel in 2017. It reported $15.6 billion in mortgage production volume in the third quarter, a gain from its $13.9 billion in the second quarter. The bank’s mortgage volume however was down 45% from the $28.4 billion it reported in production volume in the third quarter last year. In addition, U.S. Bank counts a servicing portfolio of $225.2 billion.

The acquisition of New York-based Union Bank, with nearly 300 branches on the West Coast, is expected to add roughly 1 million consumers to the depository, along with 190,000 small business clients and approximately 700 corporate customers. 

Once the customer conversion has been completed, U.S. Bank will also begin a five-year, $100 million community investment plan, which will pledge approximately 60% of the spending for mortgages, business loans and other assistance in California. The move also includes a pledge to increase mortgage lending nationally by 20% and special purpose credit programs to provide downpayment assistance.