Citizens Bank to shut down wholesale mortgage channel amid market woes

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Citizens Bank to shut down wholesale mortgage channel amid market woes
Credit: © Reuters.

Citizens Bank, a significant player in the U.S. mortgage industry and the 28th largest U.S. mortgage lender, has announced the closure of its wholesale mortgage lending channel due to persistent market challenges, including intense competition and elevated interest rates. Chace Gundlach, Senior Vice President and National Sales Director at Citizens Bank, confirmed the decision through official letters to broker partners.

The bank's move comes as a response to a steep decline in mortgage volumes across its various channels. The most recent figures show year-over-year decreases in retail ($2.4 billion), correspondent ($2.5 billion), and wholesale ($1.1 billion) mortgage volumes, plummeting by 60.3%, 42.6%, and 65.4% respectively. Despite these setbacks, Citizens has managed to hold onto its rank as the 10th largest wholesale lender in the United States.

After the close of business today, the bank took immediate action by terminating broker contracts, declaring that no new submissions would be accepted. However, Citizens Bank has assured that it will continue servicing existing mortgages.

Citizens Bank had emerged as one of the few large depository banks with operations across retail, wholesale and correspondent mortgage sectors after acquiring Franklin American Mortgage in 2018.

The repercussions of this strategic shift will be felt into the coming year, as employees were informed about impending layoffs set to commence in 2024. This decision underscores the broader impact of the current economic climate on the mortgage sector and reflects the bank's efforts to navigate through an increasingly challenging financial landscape.

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