July 27 (Bloomberg) -- Wells Fargo & Co., the biggest U.S. home lender, said Avid Modjtabai will lead the bank’ new consumer-lending business and that Mike Heid will be sole president of the mortgage unit.
Modjtabai, 49, previously head of the technology and operations group, will oversee the Wells Fargo Consumer Lending division, which will include mortgage, home-equity and student loans, among other businesses, the San Francisco-based company said yesterday in a statement.
Heid, 54, had been co-head of the mortgage business with Cara Heiden, 55, who’s retiring, and will report to Modjtabai, the firm said. Kevin Rhein, 57, who led the card and consumer- lending units, will become chief information officer, taking over technology operations from Modjtabai.
“We strengthen our culture and our leadership pipeline when we rotate top talent across lines of business and organizations,” Chief Executive Officer John Stumpf, 57, said in the statement. “Consolidating our consumer-lending activities under one organization reflects our focus on putting customers at the center of everything we do.”
Wells Fargo is preparing for the retirement of Mark Oman, the executive in charge of mortgage and consumer finance who will step down by year-end. Oman has been at the bank since 1979 and led its rise to become the nation’s largest mortgage lender.
The company also in the middle of Project Compass, a plan to cut expenses by $1.5 billion a quarter by the end of next year. Modjtabai and Rhein will continue to report to Stumpf, the company said.
Wells Fargo has declined 6.5 percent this year, closing yesterday at $28.97 on the New York Stock Exchange.
“Efficiencies on the retail side are becoming more and more important,” Marty Mosby, an analyst at Guggenheim Securities LLC in Memphis, Tennessee, said yesterday in a telephone interview. In naming Modjtabai, “they’re saying we need someone who has a lot of years and a lot of expertise in thinking about how to improve the systems, generating efficiencies and improving service at the same time.”
Wells Fargo, the second-largest U.S. mortgage servicer, is among lenders that have signed consent orders with federal regulators designed to improve their foreclosure procedures by hiring staff, upgrading document-tracking systems, and policing lawyers and vendors.
Attorneys general in 50 states are investigating mortgage servicing and foreclosures at the nation’s biggest banks.
Earlier this month, Wells Fargo was fined $85 million to settle Federal Reserve claims that employees at its consumer- finance unit, Wells Fargo Financial, pushed customers who may have been eligible for prime interest rates into loans carrying higher rates intended for riskier borrowers. The company shuttered the unit in July 2010, eliminating 3,800 jobs, and stopped making non-prime home loans.
--Editors: Peter Eichenbaum, Dan Reichl
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