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Fifth Third Exiting Wholesale Space

In a letter issued to brokers Monday, Fifth Third Mortgage president Bob Lewis revealed the bank is exiting the wholesale business to focus third-party origination on correspondent lending.

Effective March 14, Fifth Third is terminating its any Residential Wholesale Loan Broker Agreements. In the meantime, Lewis said the firm is committed to ensuring loans currently in the pipeline are fulfilled and processed. New applications will be accepted until March 31.

“While this was an extremely difficult decision to make, we intend to build on our leadership position in the correspondent market and remain committed to purchasing loans from smaller financial institutions and independent mortgage companies,” Lewis said in the letter.

With the wholesale environment growing more competitive and regulatory changes shaping business, these kinds of exits make sense for companies that don’t focus specifically on that segment, says Mat Ishbia, president of United Wholesale Mortgage.

“Some of these banks that have multiple lines of business, they have to analyze all their businesses all the time. ... You figure out what your core business is,” Ishbia said. “It’s really hard to be great at something when it’s a small part of your business.”

While he expects to see more lenders drop out of wholesale, Ishbia added that a company exiting here or there shouldn’t create a major impact in the industry, noting that he was more concerned about seeing companies leave that line shortly before January’s regulatory deadlines hit.

“There are still 100-plus wholesale lenders. It’s not a substantial amount of business at all. From a brokers’ perspective ... there’s no impact,” he said.

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