Wachovia Mortgage to Discontinue Wholesale Lending Operations

In another sign of the times for the lending industry, Wachovia Mortgage announced last evening it is going to discontinue its wholesale lending operations for third party originations. The decision will be effective July 25, 2008, which will be the last date on which Wachovia Mortgage will accept any new loan applications for wholesale funding.

The announcement came via email and was not only a surprise to its lending partners but also to its wholesale lending account executives and staff. The memo stated that Wachovia has "evaluated its business model" and as a result of a new strategic direction the company "will primarily focus on customers who have relationships with the bank, and who are located in geographies where Wachovia branches are located."

Wachovia now joins the ranks of other big banks like BOA and National City in exiting the wholesale lending business in the hopes that its in-house lending operations will be able to pick up some of the slack. With today's report of a $9 billion second quarter loss (related mostly to home mortgages) and a one-time, $6.1 billion charge related to "declining market valuations," you have to now wonder whether or not they might become a prime takeover target.