Bank of America Quits Wholesale Mortgage Business
Bank of America on Thursday said it will stop offering home mortgages through brokers by the end of the year, resulting in a loss of 700 jobs, so that it may focus on lending directly to
The job cuts are part of the 3,000 that the second-largest U.S. bank announced on Wednesday, after a poor quarter in investment banking led to a larger-than-expected 32 percent drop in quarterly profit.
"We believe our long-term opportunity lies in maximizing our more competitive retail channels," Floyd Robinson, who runs the bank's consumer real estate operations, said in a statement.
The cuts affect about 5 percent of the bank's 13,000 employees in consumer real estate.
The Bank also confirmed that Peter Forlenza, co-head of equities, has left the company in the midst of a shake-up at the corporate and investment banking unit, The Wall Street Journal reports.
Forlenza's departure was announced via an internal conference call Wednesday afternoon, just before Bank of America detailed sweeping changes at its global corporate and investment bank. The changes include the ouster of unit executive and vice chairman R. Eugene Taylor, who will be replaced by Brian Moynihan, now head of wealth and investment management.
Charlotte, North Carolina-based Bank of America plans to offer mortgages through its 5,748 branches, where it employs about 10,000 personal bankers. It also has 2,200 mortgage loan officers in 33 U.S. states and Washington, D.C.
Other mortgage lenders have this year also reduced their reliance on brokers, including Wells Fargo , Washington Mutual and Wachovia .
Bank of America made $95 billion of mortgage loans from January to June, ranking fifth nationwide, according to the newsletter Inside Mortgage Finance.
It said it has since May generated more than $50 billion of applications from a "no-fee" product under which homebuyers aren't charged for such things as applications, appraisals, originations, title insurance and flood certifications.
Chief Executive Kenneth Lewis was displeased with overall third-quarter results, especially in corporate and investment banking. He said that a majority of the 3,000 job cuts would be in that unit, while the rest would be elsewhere.
Bank of America on Aug. 22 invested $2 billion in Countrywide Financial , in a transaction that could give it a one-sixth stake in the largest U.S. mortgage lender. Countrywide is expected on Friday to report a large third-quarter loss.
In January, before the U.S. mortgage crisis surfaced, Lewis said "we're not particularly interested in the wholesale and correspondent business," in response to speculation the bank might buy or enter a joint venture with Countrywide.