Remortgage FAQ

The headline says it all. Incase you’re looking for confirmation. HERE is the BoA presser. Below is the text of the release.

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Strategic Move Will Build Upon Leadership Positions in Retail, Correspondent as well as Warehouse Lending

Bank of America Home Loans will exit the earliestRemortgage wholesale channel to focus more operational resources toward fulfillment capacity for its leading direct-to-consumer retail channel, helping existing as well as recent customers obtainRemortgage financing. Bank of America will as well as devote additional resources toward enhancing its leadership positions in correspondent as well as warehouse lending. The exit will be completed following an orderly transition of loans currently in process.

“By exiting the earliest mortgage wholesale channel, we can redirect critical operational resources to further enhance our capabilities in direct-to-consumer channels,” said Barbara Desoer, president of Bank of America Home Loans. “This is an investment in strengthening our competitive position by delivering on the services our mortgage customers expect from Bank of America.”

Bank of America holds a prominent share in retail mortgage originations, with 22 percent of the retail market in 2009, according to Inside Mortgage Finance (IMF). Bank of America’s share of the earliest mortgage wholesale channel was 8 percent in 2009. Conversely, Bank of America was the leading participant in the correspondent mortgage channel, with nearly 26 percent market share, according to IMF.

“Bank of America remains committed to purchasing as well as financing loans from Correspondent Lending clients, including those approved to originate loans from mortgage brokers,” said Doug Jones, president of Bank of America Institutional Mortgage Services. “We intend to build upon our leadership position in that market to provide enhanced liquidity to the smaller financial institutions as well as independent mortgage companies that supply mortgages as our correspondent clients.”

Associates impacted by the exit from the earliest mortgage wholesale channel will possess the opportunity for redeployment to other Bank of America Home Loans units, including direct-to-consumer operational units that are helping Bank of America customers take advantage of historically abridged rates to purchase recent homes or refinance existing homes. Associates will as well as possess the opportunity to transfer to other Bank of America Home Loans units, including Correspondent as well as Warehouse Lending, Retail Sales as well as teams serving the needs of distressed borrowers.

Bank of America will work closely with its earliest mortgage wholesale clients to ensure that loans currently in the pipeline are fulfilled as well as processed for consumers.

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One has to wonder incase this move is related to pending originator compensation reforms (overage caps coming IMO) or it was a clear risk management decision.  The major lenders/aggregators are highly susceptible to repurchase risk, plus the FHA just raised the stakes with recent third party origination risk retention regs. I was under the impression that the majority of BoA’s buybacks could be sourced back to their own retail, manually underwritten products though.  Either way…BoA is following the path of JP Morgan Chase…no more wholesale lending.