Today Bank of America announced that it's existing wholesale lending.
"Bank of America Home Loans will exit the first mortgage wholesale channel to focus more operational resources toward fulfillment capacity for it's…retail channel…. Bank of America will also devote additional resources toward enhancing its leadership positions in correspondent and warehouse lending…"
My employer, Mortgage Master Service Corporation, IS a correspondent lender. And we work with Bank of America as well as Chase (who elected not to terminate their relationship with mortgage brokers a while ago).
Why is this happening to mortgage brokers? The "why" is debatable and not so simple. I'm sure that loans originated by correspondent lenders tend to perform better than those by mortgage brokers as a whole. Correspondents have far more liability (aka "skin in the game") than a broker when originating a mortgage as they have the potential for buybacks down the road or a loan not being purchased by the lender, leaving the loan in their line of credit.
But…even though I'm technically not a mortgage broker, I find this occassion sad. There are many outstanding mortgage brokers who have originated stellar loans which have benefited banks. Wholesale Bank Reps have called on mortgage brokers for years explaining their program guidelines with the hopes of gaining more business for the bank. After the mortgage broker originates the loan and it closes with that bank, they do their best to retain that client.
By the way, I believe the last "subprime" presentation in our office was by Countrywide (now Bank of America)…oh I wish I had my Livescribe pen back then…I would be able to share my old notes.
Rhonda,
Not only do correspondent loans perform better, I’ve heard they perform better than the retail loans closed by the banks themselves!
I hope you’re doing well!