BofA to sell or close another mortgage arm, putting jobs at risk
Bank of America Corp. has put another giant piece of the Countrywide mortgage empire on the auction block -- the correspondent lending arm, which buys closed home loans from mortgage bankers, commercial banks and other loan originators.
A spokesman said Wednesday that the Charlotte, N.C., bank is in serious talks with a buyer for the correspondent business. But if it can't strike a deal with that buyer or find another, Bank of America would shut down the business, jeopardizing 1,400 jobs.
Of those, about half are in Southern California, spokeswoman Jumana Bauwens said -- 450 in Westlake Village and 250 in Thousand Oaks.
From a statement provided by Bauwens on Wednesday:
We intend to sell the correspondent mortgage lending division or, if a suitable deal is not identified, we will consider other options, including winding down the correspondent lending business in an orderly manner. At this time, our correspondent lending operations continue business as usual.
Bank of America is currently the second-largest player in the correspondent market, with 23% of the business, while No. 1 Wells Fargo & Co. has a 26.2% share, said Guy Cecala, publisher of Inside Mortgage Finance.
Of Bank of America's total $40.4 billion in mortgage loans in the second quarter, more than half -- $21.8 billion -- was generated through the correspondent channel.
Bank of America has been shedding businesses it considers nonessential as CEO Brian Moynihan tries to raise capital and focus the company, the nation's largest retail bank, on selling multiple products to its core customers.
Barbara DeSoer, who heads up the home-lending business, decided that borrowers who obtain loans from other originators do not fit in that category, BofA mortgage spokesman Dan Frahm said. The bank generally provides customer service to borrowers as part of its deals with the correspondent lenders who make the loans and then sell them to BofA.
"We want to be in the direct-to-consumer business," Frahm said. "These are customers who elected to finance their mortgages using a brand other than Bank of America."
When Bank of America in 2008 acquired Countrywide Financial Corp., then the nation's largest mortgage lender, the stated aim was to take advantage of the superior systems the Calabasas company was said to have developed for all aspects of the home lending business, including correspondent lending.
But after recording billions of dollars of losses related to Countrywide, Bank of America has wound up selling or shutting down many mortgage operations.
The bank previously exited wholesale mortgage lending, which is making loans through brokers, and the reverse mortgage business, which allows older people to remain in their homes while drawing down the home equity to live on.
It also sold Balboa Insurance, a legacy Countrywide unit. Balboa provides insurance policies that are forced upon homeowners who let their own fire insurance lapse, often because they are headed for foreclosure.
-- E. Scott Reckard
Photo: Home Defenders League activists rally in San Jose. Credit: Paul Sakuma/Associated Press