W
ashington Federal Bank, a Seattle-based institution, is shifting its focus away from residential mortgage lending. The bank announced it will cease originating new mortgages, a move that follows competitors in the industry. This decision comes as WaFd has been originating mortgages for over a century.

    The change in strategy will result in layoffs affecting 8% of the company's staff. The bank plans to close existing mortgage applications by mid-March while continuing to service its home loans and lines of credit. Commercial lending, including commercial mortgages, will remain a core business area, with WaFd expanding its offerings to include Small Business Administration-backed loans.

    According to CEO Brent Beardall, the changing landscape of single-family mortgages, where many loans are tied to federal government backing, has contributed to this decision. Additionally, technology and regulatory issues, such as improving compliance with the Community Reinvestment Act by making more low- and moderate-income loans, have also played a role.

    WaFd Bank operates over 200 branches across nine states in the western US, originating $156 million in residential mortgages last quarter and $430 million for its fiscal year. The company reported a net income of $47.3 million for the most recent quarter, down from the prior quarter and year-over-year. WaFd expects to realize $17 million in annual savings starting mid-year.

    This move follows other banks, such as Ally Financial, which recently announced layoffs and the end of residential mortgage originations.