Back in August, Bank of America’s Chief Executive Officer, Brian T. Moynihan told Bloomberg that they “intend to sell the correspondent-mortgage lending division or, if a suitable deal is not identified, we will consider other options”. Since then, Bank of America failed to find a buyer for their correspondent lending service and is now shutting down the service. The correspondent mortgage industry consists of closed loans that are bought from the intial lender and typically resold.
Terry Francisco, spokesman for Charlotte, North Carolina-based Bank of America, stated “we ended our search to find a buyer for that business and we are now moving ahead with winding it down”. Moynihan details the bank’s plan to make Bank of America a “smaller, more focused company” which includes trimming the bank’s employees over the next few years in order to “focus (their) attention on consumers who choose (the BOA) brand.”
Bank of America will still be lending directly to consumers, their intention is to help reduce or stop their losses on home loans. By the end of 2011, they cease relationships with correspondent bankers and transfer many of their 1,200 employees from this branch into other roles within their banking system.
This could potentially decrease the bank’s mortgage origination volume since 47% of Bank of America’s mortgage origination in the first quarter of 2011 were purchased from correspondent lenders according to Inside Mortgage Finance.
Photo: Home Defenders League activists rally in San Jose. Credit: Paul Sakuma/Associated Press