AYF/GF 144 | Big Banking Shifts

 

Are big banking shifts about to come to Wells Fargo? Is their abandoning borrowers a taste of things to come? In this episode, Merrill Chandler analyzes Wells Fargo’s decision to end their line of personal credit instruments. He also takes a look at a few other things that may change in their policies. Learn what you can do to recover from this development. Tune in to find out more.

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Wells Fargo Is Abandoning Borrowers: A Foreshadow Of Big Banking Shifts To Come?

In this episode, we’re doing it a little bit differently. If you’ve been bingeing episodes, you’re no stranger to this. I did a crazy, insane review of what Wells Fargo is doing inside of their own profit modeling and how it’s affecting lenders. It was well done that I’m posting it as an episode and giving you this intro to give you context. The episode that follows this is almost like a companion piece. Read carefully about how this Wells Fargo move may affect fundability but it’s going to tee you up. There are some crazy things going on with regulations and what the Feds are doing to support lenders in expanding operations among the credit invisibles.

I don’t want to give too much away but, in this episode, we’re talking about how Wells Fargo is contracting the credit instruments that’s offering on its personal side. They’re keeping the high revenue and yield accounts, and getting rid of completely the low yield accounts. While for some of you, this may be old news, these and other lender strategies that will follow are going to impact your fundability. We’re diving deep into Wells Fargo and setting you up for further lender evolutions that are occurring.

Wells Fargo did it again. What do I mean? This is The Weekly News update where we’re gleaning over lender symposiums and newsletters I subscribe to, feedback and intel coming in from our students, clients, etc. This is about Wells Fargo. Wells Fargo is significantly shifting its lending model from personal to business. What do I mean by that? If you guys remember, years ago, Wells Fargo basically cut off all direct applications. You couldn’t walk into a Wells Fargo branch or go online and get a Wells Fargo auto loan. You had to go to a dealership and the dealer would write a Wells Fargo auto loan. How do I know this? When it was time to go through my refinance of my vehicle, I went to the dealership to buy it out of its lease.

Using our boot camp strategies, I asked the lender to pull a specific credit score from Wells Fargo because I wanted and I have an awesome relationship with Wells Fargo. I wanted them to carry my auto paper so I can continue to build that relationship. I had to go to the dealership to do that. Even my personal banker at the branch would not take the app. They stopped issuing and taking applications for secured credit cards. They said that they would continue to graduate the secured credit cards. Upon the 6, 12 or 18 months, if you proved up, they would send you your money back. Now that card would be unsecured.

Guess what they did? Notices have gone out to Wells Fargo credit line holders. These are personal credit nines, not the business lines of credit. They send out a notice. One of our clients forwarded his notice to us, saying that, “On August 23rd, 2021, the credit line would be closed. Any remaining would be converted into a solid payment plan with a fixed rate and it would become the equivalent of an installment loan.” Why are they’re shutting down personal credit lines? They are going gangbusters on their personal credit cards. Personal credit cards and loans are the only credit instruments left in the inventory or inside of the offerings of Wells Fargo’s personal side.

You can still originate a mortgage but mortgages have always been a special case. When it comes to unsecured credit, they are only doing personal credit cards. Credit lines are out and personal loans, revolving credit, I’m going to guess they haven’t been hit yet. If I were to wager, I’ll bet you in over the course of 2022 or so, they might even terminate and stop offering personal loans. Why is this? First of all, Wells Fargo has been a business bank for generations. It moved into offering personal credit instruments separate from the business credit instruments that had been known for from the ‘60s, ‘70s, ‘80s. It looks like they’re returning to their roots. They are moving.

None of my contacts at Wells Fargo could weigh in on this. They see the policies coming down from higher up. I’m going to my contacts at FICO and see if there’s somebody that they know at Wells Fargo that I can ask more questions about. It looks like the answer isn’t important. We need to be flexible. That’s why we have these news updates. Our advisor team has all been grounded and clear that no more personal credit lines are going to be available from Wells Fargo. We do not recommend personal credit lines anyway. This is not a loss for us for optimization purposes.

AYF/GF 144 | Big Banking Shifts

Big Banking Shifts: Wells Fargo is contracting the credit instruments they’re offering on their personal side, keeping the high-revenue and yield accounts and completely getting rid of the low yield accounts.

 

If a client has a Wells Fargo Tier 1 but has a credit line, it’s an 80% credit instrument. There’s too much baggage with a credit line. They’re too easy to use, which means the utilizations are going to ruin your personal fundability, etc. We prefer a credit line if you’re going to have one to have it on the business side, but more importantly, is that if you’re going to have business lines of credit, we will ultimately want to have a personal relationship, either a checking account and/or a personal credit card so that we can leverage that internal performance data over onto the business side.

They’ve got awesome credit lines and business loans on the business side. That’s the latest and greatest on Wells Fargo. One of the things we need to remember is that, let’s say, they get rid of personal loans, which are also unsecured, mortgages and auto loans are still going to be secured and then personal credit cards. If they keep those loans, then notice their installment loan portfolio is still a strong offering. Right now, they are continuing to offer personal unsecured auto loans through the dealership and mortgages. All of those are still available at Wells Fargo. I’m your connection to the wide and wonderful world of business and personal funding.

I want to wrap up one final thing. If you do have a Wells Fargo personal credit line, they’re going to be closing it down. Remember, banks are state banks. They have a federation of banks, a national association of banks. That’s why there’s an NA in their brands. In Washington DC, it was August 23rd. How do we leverage this? I’m giving this one to you for free. Not just my clients. I want everybody to be able to take advantage of this. I want you to like, love, share, send this to your friends. We don’t know who has a credit line with Wells Fargo. You need to get this out there because this is a once-in-a-generation opportunity.

Wells Fargo did it again. They’re significantly shifting their lending model from personal to business. Click To Tweet

If they’re going to close down a personal credit line and you have a positive reputation with Wells Fargo, you have the opportunity to go to your banker and say, “If you’re killing my credit line on the personal side, would you be willing to open up that same amount on the business side?” Eighty percent of that decision is based on your personal profile. If you’ve maintained a positive relationship personally with Wells Fargo and using that personal credit line well, there may be a good chance for you to ask the business banker, “They’re closing my personal line down. Can we open up a new line, same limit, amount, everything in the name of one of your businesses?”

It’s a crazy opportunity to get a business line of credit that doesn’t report to your personal because we know Wells Fargo doesn’t report to personal instead of a kludgy and bad for your personal line of credit. Use this opportunity to get that done. Share this with everybody you can so that we can get to all the people who may have Wells Fargo lines. It’s a pleasure, always keeping you up to date on every one of the movements that we are seeing and are coming to us in the banker universe. Have a wonderful day.