HousingWireHousingWire
San Francisco-based Wells Fargo, one of the nation’s largest banks, received welcome news on Tuesday when the Federal Reserve lifted restrictions on the company’s asset growth. The restrictions were part of an enforcement action tied to Wells Fargo’s creation of millions of unauthorized bank accounts.
In a statement, the Fed’s board of governors said they’ve finished their review of the bank’s “remediation efforts and required third-party assessments” stemming from a 2018 enforcement action that froze Wells Fargo’s asset size at roughly $2 trillion.
The central bank also completed an internal assessment of Wells Fargo’s “corporate governance and firmwide risk management programs” while stressing that some provisions from the 2018 penalty will remain in place for now.
“The removal of the growth restriction reflects the substantial progress the bank has made in addressing its deficiencies and that the bank has fulfilled the conditions required for removal of the growth restriction,” the Fed explained.
‘Pressure-cooker culture’
Investigative reporting by the Los Angeles Times that began as early as 2013 uncovered a “pressure-cooker culture” at Wells Fargo. Long-running executive strategies led to widespread fraudulent activity among employees who sought to achieve sales targets and performance bonuses.
This activity included some 3.5 million unauthorized bank accounts opened between 2019 and 2016, as well as credit cards ordered without consumer permission and forged signatures on paperwork.
The Consumer Financial Protection Bureau cracked down on the bank when it issued a $100 million fine in September 2016. Wells Fargo also agreed at that time to pay an additional $85 million to the Office of the Comptroller of the Currency and the City and County of Los Angeles.
In February 2020, the bank reached a $3 billion settlement with the Department of Justice to “resolve their potential criminal and civil liability” stemming from sales tactics over a 14-year period.
“The Federal Reserve’s decision to lift the asset cap marks a pivotal milestone in our journey to transform Wells Fargo. We are a different and far stronger company today because of the work we’ve done,” Wells Fargo CEO Charlie Scharf said in a statement.
“In addition, we have changed and simplified our business mix, and we have transformed the management team and how we run the company. We have been methodically investing in the company’s future while improving our financial results and profile. We are excited to continue to move forward with plans to further increase returns and growth in a deliberate manner supported by the processes and cultural changes we have made.”
The bank also noted that the vast majority of its 215,000 employees will receive $2,000 each — an award given through a restricted stock grant — for working either directly or indirectly to improve risk management functions.
What does this mean for Wells Fargo’s mortgage business?
While the regulatory move frees up the bank to grow its balance sheet through multiple avenues — including more deposits, small-business lending or M&A deals — the implications for its mortgage lending division is less clear.
According to data from Inside Mortgage Finance (IMF), Wells Fargo ranked No. 21 among the nation’s largest mortgage lenders during the first quarter of 2025. It originated $4.42 billion in home loans from January through March. That figure is up 26% from the same period a year ago.
But it’s only a fraction of the volume it did prior to the widely publicized fake accounts scandal. IMF data shows that Wells Fargo originated $174 billion in mortgages in 2018 — an average of about $43 billion per quarter.
The nation’s largest depository lenders have pulled back from mortgage in recent years. IMF data shows that origination volumes at Bank of America, JPMortgage Chase and U.S. Bank shrank between the first quarters of 2018 and 2025. But none of these pullbacks are comparable in size to Wells Fargo’s.
Much of the decline in mortgage lending by big banks is tied to a stringent regulatory environment that makes home lending less profitable. Urban Institute data shows that nonbanks originated 82% of all mortgages in April 2023, up from roughly 50% in April 2014.
In its Q1 2025 earnings report, Wells Fargo reported $866 million in revenue related to residential mortgages, up slightly from $864 million in Q1 2024. The $6.5 billion value of its mortgage servicing rights at the end of March was down 5% on a quarterly basis and 10% on a yearly basis.
