Seattle-based WaFd Bank, which has offered home loans for more than 100 years, announced Thursday in an earnings report that it will exit the single-family mortgage lending business.
WaFd president and CEO Brent Beardall said in a LinkedIn post that the move will involve layoffs for about 8% of the company’s employees and called it “one of the most difficult days I have had as a CEO.”
“The mortgage market has shifted over the years to the point where now about 70% of all loans are originated by/to the US Gov’t in one way, shape or form,” Beardall wrote. “The impact of this is good for homeowners. Lower rates, no prepay fees and more lax underwriting — essentially a subsidy from the gov’t. That is bad news for banks like WaFd Bank, because it has made the business of originating mortgages for our portfolio unsustainable.
“… I am deeply saddened for the impacted employees and their families, but I am proud to work for a bank strong enough to acknowledge when the world has changed and bold enough to pivot accordingly.”
According to its website, WaFd Bank has 210 branches across nine states — Washington, Oregon, Idaho, California, Nevada, Utah, Arizona, New Mexico and Texas. The company has notified customers that it will no longer accept new applications for home loans but will “continue to service all existing mortgage clients, including those with home equity lines of credit and homes already under construction.”
“We will be reaching out to clients who have active loan applications with additional details and deadlines. Our intent is to finish out most loans in process by mid-March,” WaFd said on its website. It further clarified that it will continue its business lending activities, including commercial mortgages, and will begin offering loans backed by the U.S. Small Business Administration (SBA).
In its fourth-quarter 2024 earnings report released Thursday, WaFd reported net income of $47.3 million, down 23% from the $61.1 million profit it posted in the prior quarter and 19% lower than the $58.5 million profit in Q4 2023.
The bank explained that the shuttering of its single-family mortgage business is expected to save roughly $17 million per year by midyear 2025. Its servicing portfolio will retain all existing home loans and home equity lines of credit. The earnings report went on to mention that the impact of technology in the refinancing process also influenced the decision to stop offering consumer mortgages.
“Technology has made it easy for consumers to refinance (which is a good thing for homeowners), but it increases the interest rate risk for banks that hold mortgages,” the bank explained. “Our aim is to always offer products and services to our customers where WaFd Bank can add value, and we have concluded that we no longer do so in the mortgage sector.
“While not the primary factor, but certainly a contributing factor, the regulatory burden associated with mortgage lending also played a role in our decision. Recently we were notified that WaFd Bank has received an overall ‘Needs to Improve’ rating regarding our Community Reinvestment Act (“CRA”) compliance because we did not make enough loans to low and moderate income (“LMI”) borrowers and communities.”
Additionally, WaFd announced several changes to its management team. Cathy Cooper is transitioning to the role of chief experience officer. James Endrizzi will lead commercial real estate operations in Utah and Nevada. The company’s business bank division will be led by Michelle Coons, Dan LaCoste and Doron Joseph. And its commercial real estate division will be headed by Tony Barnard and Tom Pozarycki.
