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BofA's shrunken mortgage business growing a bit, CFO says

June 12, 2013|By E. Scott Reckard
  • BofA mortgage holders who had account service fees waived will lose that benefit in a year because the bank sold its mortgage servicing rights.
BofA mortgage holders who had account service fees waived will lose that… (Davis Turner, Bloomberg )

Having slashed away much of its troubled mortgage business, Bank of America Corp. is now growing the what remains, the company's chief financial officer says. 

CFO Bruce Thompson told analysts that Bank of America, once the nation's largest mortgage lender but now with just 4% of the market, is "getting what we believe is our fair share back."

"We ... expect to be in the 5% area as we exit the second quarter and we look to continue to grow from that," Thompson said Tuesday at a conference sponsored by Morgan Stanley at the Waldorf Astoria in New York.

Quiz: How much do you know about home loans?

In what has been called the worst bank deal in history, Bank of America, led by then-Chief Executive Ken Lewis, acquired the aggressive home lender Countrywide Financial Corp. in 2008, as the mortgage meltdown was creating a global financial crisis.

Countrywide was No. 1 in originating and servicing home loans at the time. Charlotte, N.C.-based Bank of America has since booked more than $40 billion of losses related to the Calabasas mortgage giant.

The bank currently ranks fourth in mortgage originations, trailing Wells Fargo & Co., JPMorgan Chase & Co., and Quicken Loans Inc., according to trade publication Inside Mortgage Finance.

Under current CEO Brian Moynihan, Bank of America has abandoned two large sectors of the mortgage business -- making loans through independent brokers and buying loans from smaller mortgage-banking firms. 

Now focused on providing home loans to existing banking customers, the bank also has been selling pieces of its mortgage-servicing operations. That business involves billing, collecting payments and handling foreclosures, much of it for loans that the bank no longer owns but manages for Freddie, Fannie and private investors.

After this year selling the rights to service about $330 billion in unpaid mortgage balances, Bank of America has largely completed its sales of such rights, Moynihan said recently. Bank of America still services $1.2 trillion in mortgages.

After the mortgage meltdown that took hold in 2007, San Francisco's Wells Fargo emerged as by far the nation's largest home lender. At one point last year, it was making a full one-third of all mortgages -- a market share its own executives said could not be sustained. 

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