Categorized | Commercial

Bank of America Opts to Stop Working with Outside Mortgage Lenders

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In what should come as no surprise, Bank of America has decided to close its correspondent business at the end of the year. Amidst all of the troubles that have surfaced over the past six months, the company initially looked to sell their correspondent mortgage business. However, a sale was never completed due to a lack of interested buyers.

Although the company plans to close down the correspondent mortgage business, they have made plans to avoid mass layoffs by transferring employees within the division to other sectors of the company. Many of those working in the correspondent sector will move to a division where they will be assisting customers that are facing difficulties with their current loans.

The planned closure is part of larger plan by the major bank to virtually eliminate a majority of the assets acquired through the Countrywide Financial purchase in 2008. In many respects, that acquisition has crippled the company’s bottom line, and as such, Bank of America is looking to relinquish bits and pieces of areas that were part of that sale. Thus far, the major bank has sold an insurance unit, eliminated a reverse mortgage unit, and has performed major cuts on a wholesale lending division.

The closing of the correspondent division will significantly reduce the company’s volume of mortgage originations. The division was responsible for half of the originations in the past year. Although the closure will adversely impact the mortgage originations volume, it is a necessary move, as the company must devote as much manpower as possible to help reduce the ever-growing number of troubled loans.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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