Bank of America looks to exit correspondent mortgage biz

Bank of America Corp is looking to sell its correspondent mortgage business and the unit's employees could be notified as soon as Wednesday, the Wall Street Journal said, citing people familiar with the matter.

The bank had decided to exit the correspondent channel, which employs more than 1,000 people, because it no longer fits with the long-term strategy for its mortgage unit, the Journal said.

Correspondents fund loans and sell them to larger lenders.

The bank has used the correspondent channel to build origination volume and make money by re-selling the loans to other parties and then servicing them, the newspaper said.

Loans purchased from correspondents accounted for 47% of Bank of America's mortgage originations, or $27.4 billion, in the first quarter of 2011, the Journal said citing Inside Mortgage Finance.

Bank of America could not immediately be reached by Reuters for comment outside regular US business hours.

The biggest US bank plans to cut 3,500 jobs in the next few weeks, its Chief Executive Brian Moynihan had said in a memo to staff on Aug. 18, as it tries to come to grips with $1 trillion of problem home mortgages.

Source: Business Standard