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BofA Plans to Close Mortgage Correspondent Unit

On the heels of attempts by investors to derail a mega settlement in the courts, ""Bank of America"":https://www.bankofamerica.com/ continued to shake up headlines Wednesday with a story in the ""_Wall Street Journal_"":http://online.wsj.com/article/SB10001424053111904332804576541334100124162.html confirming that the mortgage giant plans to sell off its share of the correspondent mortgage market. With mortgage correspondents in the bank's unit set to soon receive their pink slips, multiple news outlets quoted the _Journal_ as suggesting some 3,500 could feel impact in their jobs.


The mortgage giant, recently under fire from a series of suits by investors over bad mortgage-backed securities, signaled its intentions to pull back from the mortgage correspondent sector after deciding correspondent-funded loans no longer applied to a long-term strategy underway, according to ""_Reuters_"":http://in.reuters.com/article/2011/08/31/idINIndia-59065720110831, which tracked the _Journal_ exclusive.

├â┬ó├óÔÇÜ┬¼├àÔÇ£As part of our ongoing activities to align the Bank of America Home Loans business to the bank├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós customer-driven strategy, we have made the decision to exit the correspondent mortgage lending division,"" Jumana Bauwens, a spokesperson with Bank of America, tells _MReport_. ""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.""


Also following the _Journal_, ""_Bloomberg News_"":http://www.bloomberg.com/news/2011-08-31/bofa-may-sell-correspondent-mortgage-lending.html quoted Dan Frahm, another spokesperson, as saying by e-mail that the company will ""continue business as usual"" for the moment.

In an August regulatory filing, Bank of America reported that loans it purchased it from correspondents took up 27 percent of outstanding claims as of June, according to _Bloomberg_. The news service also said that the mortgage giant said it could not recover funds from many of the correspondent shops that went under during the financial crisis.

_Bloomberg_ quoted Frahm as saying that Bank of America employs some 1,400 correspondents at the moment, and that ""[t]here is no impact to this team at this time, and ultimate decisions will be determined as part of the potential sale process.""

If Bank of America decided to slash payroll, it would likely add to a swath of job losses for mortgage professionals with the company. A recent ""MortgageDaily.com"":http://www.mortgagedaily.com/ ""study"":http://www.mortgagedaily.com/MortgageEmploymentIndex.asp?spcode=pr ""found"":https://themreport.com/articles/more-q2-layoffs-for-mortgage-professionals-2011-08-30 larger mortgage companies culpable for 5,000 second-quarter layoffs in the mortgage originations industry, with Bank of America responsible for nearly 1,000 pink slips.

The news that Bank of America plans to leave the mortgage correspondent business also arrives in the wake of a number of suits against the company, launched by investors seeking to recover losses from bad mortgage-backed securities. The mortgage giant acquired liabilities for the securities when it purchased sinking Countrywide Financial Corp. in 2008.

On Wednesday the ""Federal Housing Finance Agency"":http://www.fhfa.gov/ joined ranks with the ""FDIC"":http://www.fdic.gov/, ""USBancorp"":http://www.usbank.com/index.html, and other investors by filing to stop an $8.5-billion settlement proposed by Bank of America to compensate investors in one sweep.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

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