BofA to end correspondent lending in 2011
Bank of America (BAC) will wind down its correspondent lending channel by the end of 2011. The bank said in August it would close the department if it could not be sold. A spokesman for the banking giant confirmed to HousingWire Tuesday that the 1,200 correspondent lending associates will be moved to other departments. As a first step, roughly 100 at the Westlake Village branch in California will move to the BofA legacy asset division during the week of Oct. 17. The legacy asset division is grappling with $1 trillion in soured mortgages and securities written prior to the 2008 acquisition of Countrywide Financial Corp. "Bank of America Home Loans plans to exit the Home Loans correspondent mortgage lending channel and focus entirely on retail distribution for its mortgage products and services," the spokesman said. "Pursuing this path enables Bank of America with the opportunity to align resources to its direct-to-consumer channel and focus on its strategy of deepening relationships and acquiring new customers through mortgage sales and services." Correspondent lenders provide a mortgage to a borrower and then sell the loan to another institution, typically through a warehouse line of credit. These lenders underwrite and approve their own loans, which gives them as much freedom as risk. The investor can remove the warehouse line and even force a correspondent lender to repurchase bad loans. BofA clarified there would be no immediate change for its warehouse lending clients. National Mortgage News reported Tuesday on the banks' decision to close its correspondent lending operations, citing unnamed sources. Write to Jon Prior. Follow him on Twitter @JonAPrior.