Bank of America to Suspend Broker Loans
Bank of America to Suspend
Broker Loans
Bank of America Corporation announced Wednesday that they will no longer offer mortgage loans through independent brokers, a market in which they are the third-largest in the US. Barbara Desoer, the bank's President of Home Loans, said in a statement that the change will “further enhance our capabilities in direct-to-consumer channels.” The statement also said the bank would gradually shift away from the business “following an orderly transition of loans currently in process.”
Other large banks, like JP Morgan Chase & Co., have already stopped extending loans through brokers because a significant portion of them had employed lax lending practices, leading to bad loans which helped to fuel lenders' losses and set off the housing crisis. According to Inside Mortgage Finance, Bank of America extended more than $8 billion in loans through brokers during the first half of the year. The total gives the bank a nearly 12 percent market share.
Bank officials say that the broker division consists of about 1,000 employees, most of whom will be able to transfer to other divisions within the company. The bank ranked first nationally in loans acquired, and second in total home lending, according to Inside Mortgage Finance. The publication also reports that about ten percent of total home lending in the US during 2010's first half were delivered through brokers, compared to a record-high of 31 percent set in 2005.
JP Morgan Chase CEO Jamie Dimon, in a speech delivered in March of last year, said: “My biggest mistake, probably of my whole career, was not closing down our mortgage-broker business sooner.” JP Morgan stopped offering loans through brokers in January 2009.
Bank of America Corporation announced Wednesday that they will no longer offer mortgage loans through independent brokers, a market in which they are the third-largest in the US. Barbara Desoer, the bank's President of Home Loans, said in a statement that the change will “further enhance our capabilities in direct-to-consumer channels.” The statement also said the bank would gradually shift away from the business “following an orderly transition of loans currently in process.”
Other large banks, like JP Morgan Chase & Co., have already stopped extending loans through brokers because a significant portion of them had employed lax lending practices, leading to bad loans which helped to fuel lenders' losses and set off the housing crisis. According to Inside Mortgage Finance, Bank of America extended more than $8 billion in loans through brokers during the first half of the year. The total gives the bank a nearly 12 percent market share.
Bank officials say that the broker division consists of about 1,000 employees, most of whom will be able to transfer to other divisions within the company. The bank ranked first nationally in loans acquired, and second in total home lending, according to Inside Mortgage Finance. The publication also reports that about ten percent of total home lending in the US during 2010's first half were delivered through brokers, compared to a record-high of 31 percent set in 2005.
JP Morgan Chase CEO Jamie Dimon, in a speech delivered in March of last year, said: “My biggest mistake, probably of my whole career, was not closing down our mortgage-broker business sooner.” JP Morgan stopped offering loans through brokers in January 2009.
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