Bank of America is closing Wholesale Loan Origination as of Today!# Living
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NEW YORK—Bank of America Corp. will exit the wholesale mortgage-lending
business Tuesday, limiting its dealings with mortgage brokers as it focuses
on loans made with consumers and large community banks.
But some fear the move could leave fewer options for consumers as they shop
for the most competitive mortgage rates.
The decision also leaves Wells Fargo & Co. as a main player in the wholesale
game, which lets consumers secure loans through mortgage brokers instead of
the bank directly. Last year, J.P. Morgan Chase & Co. said it would no
longer purchase loans originated by brokers, noting in an internal memo that
loans done by Chase professionals outperformed those originated by brokers.
Barbara Desoer, president of Bank of America Home Loans, played down the
origination-quality issue, emphasizing the bank's move as a strategy shift
that lets it play on its strengths and work more directly with customers.
"We tend to prefer business where we have scale," Ms. Desoer said in an
interview. "We love the direct-to-consumer business because it's very
closely aligned with the consumer franchise that Bank of America has."
The bank will stop taking wholesale applications Tuesday. It will honor
loans in the pipeline.
About 1,000 employees will be affected, with some jobs lost. Many staffers
will be offered the chance to transfer to other loan units—including
correspondent, largely community banks, retail sales working directly with
consumers and warehouse lending, which provides short-term loans to small,
independent mortgage banks, letting them fund home mortgages.
Last year, the bank captured 22% of the retail mortgage market, compared
with 8% of the wholesale channel, according to Inside Mortgage Finance, a
trade publication. Bank of America acquired the wholesale channel with its
2008 acquisition of Countrywide Financial.
Ms. Desoer declined to predict how those percentages would change.
business Tuesday, limiting its dealings with mortgage brokers as it focuses
on loans made with consumers and large community banks.
But some fear the move could leave fewer options for consumers as they shop
for the most competitive mortgage rates.
The decision also leaves Wells Fargo & Co. as a main player in the wholesale
game, which lets consumers secure loans through mortgage brokers instead of
the bank directly. Last year, J.P. Morgan Chase & Co. said it would no
longer purchase loans originated by brokers, noting in an internal memo that
loans done by Chase professionals outperformed those originated by brokers.
Barbara Desoer, president of Bank of America Home Loans, played down the
origination-quality issue, emphasizing the bank's move as a strategy shift
that lets it play on its strengths and work more directly with customers.
"We tend to prefer business where we have scale," Ms. Desoer said in an
interview. "We love the direct-to-consumer business because it's very
closely aligned with the consumer franchise that Bank of America has."
The bank will stop taking wholesale applications Tuesday. It will honor
loans in the pipeline.
About 1,000 employees will be affected, with some jobs lost. Many staffers
will be offered the chance to transfer to other loan units—including
correspondent, largely community banks, retail sales working directly with
consumers and warehouse lending, which provides short-term loans to small,
independent mortgage banks, letting them fund home mortgages.
Last year, the bank captured 22% of the retail mortgage market, compared
with 8% of the wholesale channel, according to Inside Mortgage Finance, a
trade publication. Bank of America acquired the wholesale channel with its
2008 acquisition of Countrywide Financial.
Ms. Desoer declined to predict how those percentages would change.
