B of A to quit wholesale lending

More trouble for mortgage brokers: Bank of America is quitting the wholesale lending business. This tonight from AP on a move the bank will officially announce tomorrow: "In addition to scaling back its investment banking operations, Bank of America Corp. is exiting the wholesale mortgage business and eliminating about 700 jobs, bank officials said Thursday."

More: "The nation's second-largest bank will stop offering home mortgages through brokers at the end of the year to focus on direct-to-consumer lending through its banking centers and loan officers. The move also eliminates the jobs in the bank's consumer real estate unit."

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Comments

[rubberbandman]

This is just the start ..the next to go will be the realtors....soon you will see the for sale signs in the front yards reading..
For Sale "B of A"

Good Luck NAR

[Steve Reynolds]

I feel kind of bad for what's really going on here, the actual human cost. A lot of people who spent half a million dollars of their future income to buy these properties have basically spent their future retirement funds for these purchases. Even if they can afford to keep up the payments look at the burden they have put on themselves, not only do they have to pay off the house and interest but need to find another half million to save on top of that. They have basically funded another persons retirement at the expense of their own, not only are they going to be paying into social security for the current retiree but they gave them their IRA money too.

Countrywide is set to report tomorrow, word is around a loss of $1.05 per share.

[Martin]

This is exactly what I meant when I wrote here just 23 hours ago that I feel sad about the domino effect of The Real Estate Panic of 2007. People lose their homes. People lose their jobs. People lose their dreams.

How very shortsighted and arrogant it is for one person to say only 1% will be impacted by the Panic and that remaining property owners merely won't be able to retire at age 50 and buy a small island. The majority will feel the domino effect of this market cycle in one way or another.

Oh, and for the record, as a landlord I am (so far) benefitting financially in terms of monthly rents. But I'd gladly trade that off if I knew it would save those jobs, homes and dreams.

[joeinlosangeles]

--Even if they can afford to keep up the payments look at the burden they have put on themselves, not only do they have to pay off the house and interest but need to find another half million to save on top of that. They have basically funded another persons retirement at the expense of their own, not only are they going to be paying into social security for the current retiree but they gave them their IRA money too.--

I feel sorry for some of them. I don't feel particularly sorry for the people who are in a pinch because they treated their houses like piggy banks or who overextended themselves because they believe their houses would appreciated at a huge rate forever. Those people simply gambled and loss. I've done that in the stock market and no one is weeping over the money I lost.

[TrentPatrick]

This is going to shake up the Mortgage lending business. With Countrywide reporting tomorrow the rumor is that they will be picked up by BofA. The question is how long until the other big lenders go with this same idea and stop accepting loans from mortgage brokers. Many lenders have been increasing their retail lending branches. Mortgage brokers will still be needed to find the right loan. There are few buyers that are clean and easy. Most have some issue and some leel of dificulty in closing their loan. Some mortgage brokers will still direct their clients or the smart ones will become realtors and be able to find the house and direct their clients to the right lender. The right lender is not the lender with the best rate. Depending on the issues that many borrowers have, the right lender is one that doesn't check or have whatever issue that borrower has, and will approve and fund the loan.

[Enlightenment]

The 401K is meant for retirement, not investing in your house for retirement, like they say about a fool and his money. It appears that housing buble found all the fools.

[Another]

I have zero sympathy for the greedy fools that will lose their butts in this.

Greedy is fine, foolish is punished.

[Adolfo]

Well people it's not that easy. The next step will be a maximum age of borrowers. I am sure the banks will make sure that the loan is paid off when entering into retirement. Meaning, deadline for a 30 year loan is 35 years of age. So all the people waiting and getting older will not have anything at the end. And maybe the stock market crashes when they are 64 so the 401k is worthless and they are still renting....

[sheila]

not sure how this will help anything. their own "lending executives" are big liars who work on commission, too. if one of them screws up or lies to you, B of A will NOT stand behind the promises or help you in any way, unless you think having your account exec be fired the day before closing helps you in some twisted way...

[Cal]

I've seen various numbers that say broker originated loans are in foreclosure more than lender originated loans. During a time when the thing that matters the most is credit quality, you'll want to make sure everything you originate is absolutely the best. The lenders showing the best credit quality performance are going to be able to securitize the most at the best price.

BofA model seems really great, they are going to originate all the loans in house, portfolio them for a couple of years and then securitize them. They put their money on the line and show the investors that the loans are good loans.

[ace]

here is a great link on what is happening to the ...great american broker

http://blownmortgage.com/2007/10/15/
dead-man-walking-wholesale-lending-is-marching-
towards-extinction/

[MyLessThanPrimeBeef]

Let's face it. Would you rather have the faxed copy, from a broker, of a signed document that certifies the borrower, working a reporter for a national paper, earns $1.5 million a year, or do you rather have that document executed in front of you in the branch office?

[Pete Viles]

MyLessThanPrimeBeef wrote, "Would you rather have the faxed copy, from a broker, of a signed document that certifies the borrower, working a reporter for a national paper, earns $1.5 million a year, or do you rather have that document executed in front of you in the branch office?"

MyLess -- how did you know that I claimed $1.5 million in income? As they say in Louisiana politics, I not only deny the allegation, I deny the alligator.

[MyLessThanPrimeBeef]

Peter, I know because, just between you and me, that's the going rate, or soon will be after Bernanke gets done with his effort to reflate, but will actually re-inflate, the economy.

[xtine]

ba-dum-BUM.

Setup->straight man->punch.

Prime, you need to be writing comedy. Those guys make 1.5 BEFORE the Bernakiflation.

[ohreally]

Martin:
"Oh, and for the record, as a landlord I am (so far) benefitting financially in terms of monthly rents. But I'd gladly trade that off if I knew it would save those jobs, homes and dreams."

So what's preventing you from lowering your rents anyway and saving at least a few people's dreams and livelihood? If you really feel sad, then do something about it.

What's sad is that because of this housing run-up, my wife and I can't reasonably afford to buy a home for our 6 month old baby, and instead have to rent an overpriced apartment. We make 110K/yr and still can't realistically afford any of these ridiculously overpriced homes, without putting us in the dog house. How's that for sad?

Help us and everyone else who's in our boat, Martin, and walk the walk by lowering your rents.

[investorguy]

ohreally: that apartment is worth whatever you're willing to pay for it. If you don't want to pay that price, rent somewhere else. It's not Martin's job to lower prices below market ands take a monthly loss so you can feel better. And you still won't be able to afford the house in LA -- not that that owning an LA home is anyone's birthright in the first place.

[investorguy]

ohreally: I didn't mean that to sound as harsh as it did.

But my point is that the market sets rents. You can either choose to pay that rent or rent somewhere else. Choosing to live in LA on $110K (or any other income level) means you choose to cope with what the market offers at that income level. Same with living in NY, Omaha, or anywhere else.

It's not the job of the landlord or the seller to lower his or her price below what the market will pay simply to make your life or anyone else's life easier. Landlords have mortgages, too.

And unfortunately, as others have said, homeownership is not an inviolable right. It's long been the shining crown of the American Dream, and a natural American aspiration. But it's not a right granted by the Founding Fathers, by God, or by having human DNA.

[Toby]

And unfortunately, as others have said, homeownership is not an inviolable right. It's long been the shining crown of the American Dream, and a natural American aspiration. But it's not a right granted by the Founding Fathers, by God, or by having human DNA.

Posted by: investorguy

HA this arrogant "Owning a home in LA is not a right but a Privilege" Is just hackney bravado from most likely a flipper.

You didn't need to be "privileged" to own a home/condo prior to the market run up, just 20% down. And you didn't need to be "Privileged" to get a no money down 2/28 Stated income loan during the run up, just needed to have a pulse.

And you don't need to be "Privileged" to get a mortgage now, just need 20% down again and be INCREDIBLY STUPID.

And you don't need to be privileged to save money.

So lets not pretend it's something more than it is.

Oh and remember "Investorguy", Market price is not set by the seller, it's set by the Buyer.

Basically said, No the owner does not have to lower his price below current market average...well not unless he wants to sell it.

[joeinlosangeles]

Investorguy:: that apartment is worth whatever you're willing to pay for it. If you don't want to pay that price, rent somewhere else. It's not Martin's job to lower prices below market ands take a monthly loss so you can feel better.

You missed the point. Martin said he is personally benefiting from the RE situation because as a landlod he can raise rents, but he would rather make less money if others weren't being hurt. So Ohreally said, "Well, dang, if that's how you really feel lower your rents, and help out at least a few people who are your tenants." He was just calling Martin on his self-expressed desire to be self-sacrificing.

[joeinlosangeles]

Martin: This is exactly what I meant when I wrote here just 23 hours ago that I feel sad about the domino effect of The Real Estate Panic of 2007. People lose their homes. People lose their jobs. People lose their dreams.

Yup, that's often what happens when a bubble bursts. When the tech bubble burst, I loss about $100K in stock value and my income plummeted because I had a lot of tech business. Eventually things turned around. Honestly, I am positioning myself to hopefully make a profit when the RE bubble bursts. It may sound cold, but I figure life is a series of ups and down. I had a down on the tech bubble, and hopefully I'll now have an up on the RE bubble.

[investorguy]

Wow, Toby. How do you get through the day?

Home ownership has NEVER been a right. Show me where it is in the Constitution, the Magna Carta or the Bible.

Yeah, right. It's not there. Home ownership is a wonderful thing, when you can afford it legitimately.

I'm an investor, not a flipper. I do rehab and resell, but it's a small part of my business. I turn crap properties into homes, and sell them below market, to give more people an opportunity to get in. Like my fellow investors, I make a profit. That's what business is all about. I could make a bigger profit, but I choose not to.

I also rent properties to folks who can't or don;t choose to buy homes.

Speak only of what you know, junior -- you embarrass yourself when you step out of that arena.

[Toby]

I'm an investor, not a flipper.

Posted by: investorguy

Tomato, Clamato.

You're not giving objective opinions. It's like talking to a Used Car salesman about buying a 89' Yugo.

Basically said, unless you think everyone is independently wealthy in LA. The City's RE market depends on the local job market...

Yes. Working people.

So in a normal market, a person who has a upper-middle class job and salary should be able to afford the upper-middle class area in his neighborhood. This goes for each economic class.

The only trick is, you have to be responsible and save enough money for a down payment. Nothing more, nothing less.

What we have here today, is the end result of letting ANYONE take a loan out for practically ANY amount for absolutely NO money down.

So prices went whacky crazy insane. Do they need to come down? Absolutely. Will they come down? Absolutely. Will LA property reflect the job market around it again? Absolutely.

So please drop this whole "LA property is out of reach for the common person" shtick. I mean, then who are going to live in all of these LA homes, if not common Angelenos?

[ohreally]

investorguy, you missed the point. No one said owning a home is a right, and we're all fully aware of market forces deciding rents blah blah blah.

I'm just calling out all you folks who feel say you feel sad for people losing their homes, etc.

My point is it's sad that our household income is 110K/yr and we still can't realistically afford a home in LA (w/out taking out some exotic loan, which aren't even around anymore anyway). We're middle class and you'd think we'd be able to afford something reasonable, but we can't. And that's sad.

How wealthy do you need to be to live in LA geez?

[Michael Snyder]

Gentlemen, a fair price is defined as: The price the buyer and seller can agree on. I really don't think anyone on this blog paid the "sticker price" for their automobile; we all have too much fun haggling...