Bank of America to exit mortgage brokerage biz
Bank of America plans to stop offering home loans through independent brokers, focusing on direct lending and acquiring debts from other originators.
Bank of America Corp., the third-biggest U.S. mortgage lender through independent brokers, plans to stop offering home loans through that channel, focusing on direct lending and acquiring debts from other originators.
The shift will “further enhance our capabilities in direct-to-consumer channels,” said Barbara Desoer, president of Bank of America Home Loans, in a statement today. The bank said it will phase out the business “following an orderly transition of loans currently in process.”
Lenders including JPMorgan Chase & Co. have stopped offering mortgages through brokers after lax practices among people signing up borrowers helped create bad loans and fueled losses. Bank of America made $8.2 billion of loans through mortgage brokers during this year’s first half, giving it an 11.8 percent market share, according to Inside Mortgage Finance. That ranks it behind Wells Fargo & Co. and Provident Funding.
About 1,000 Bank of America employees work in the broker division and the “vast majority” will be able to move to jobs in other units, said Rick Simon, a spokesman for the Charlotte, North Carolina-based lender. The firm ranked second in total home lending and first in loans acquired correspondent companies, according to Inside Mortgage Finance.
Brokers accounted for 10 percent of U.S. home lending during the first half of this year, down from a peak of 31 percent in 2005, according to the publication.
“My biggest mistake, probably of my whole career, was not closing down our mortgage-broker business sooner,” JPMorgan Chief Executive Officer Jamie Dimon, 54, said in a March 2009 speech. The New York-based bank quit funding home loans through brokers in January 2009.
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