With the majority of Bank of America’s (BAC) lawsuits behind it, the Charlotte-based bank is refocusing its efforts and choosing to pull back from mortgages.
In a Seeking Alpha article, the new co-heads of the banks consumer banking operations said that the bank is not going to get too aggressive in mortgages anymore.
“While a lot of our competitors are still using a few growth engines such as non-agency customers, we have refocused everything into just our customer base. So things like direct mail to non-customers or mortgage through correspondence and brokers and what not, we have shut that,” said Thong Nguyen, Bank of America’s head of retail strategy, sales and operations, at the RBC Capital Markets 2014 Financial Institutions Conference.
By refocusing its efforts, Nguyen explained that the bank is really swapping its choppy revenue for steady revenue.
Bank of America repositioned everything to fit its new strategy, Dean Athanasia, president of preferred banking at Bank of America, said at the conference. “Anything that did not fit our new strategy, we got out of,” he continued.
“Now you lose a little bit of revenue when you do that, but we have been able to take out over $4 billion in costs in terms of a run rate from that and refocused our resources in our most growth areas, like the mass affluent. It’s a repositioning of this business overall,” Athanasia said.
According to Seeking Alpha, this is “less new strategy than a recommitment of one made a few years back, the mortgage restraint led Bank of America to miss the refinancing boom of the past few years. Its market share in mortgages – above 20% in 2009 – has fallen to 5%, and competitors like JPMorgan and Wells Fargo still get plenty of mortgage volume buying business from third parties.”
Bank of America closed a chapter in its mortgage lawsuits back in August, announcing a $16.65 billion settlement with the U.S. Department of Justice, certain federal agencies and six states to resolve claims over toxic residential mortgage-backed securities, collateralized debt obligations and an origination release on residential mortgage loans sold to Fannie Mae and Freddie Mac.