Bank of America plans to sell or close its correspondent-mortgage unit as CEO Brian Moynihan tries to halt losses on home loans, Bloomberg News reported.

“We intend to sell the correspondent-mortgage lending division or, if a suitable deal is not identified, we will consider other options,” including winding down the business, Dan Frahm, a company spokesperson, said.

The bank’s mortgage operations had $14.5 billion losses in the second quarter as investors insisted that the firm buy back soured loans. Shifting capital rules have also been pushing BofA to assume fewer new contracts to oversee outstanding debt, a key part of the correspondent mortgage business, Bloomberg said. [more]

Major national lenders JPMorgan Chase and Bank of America are quietly changing the terms of tens of thousands of loans for borrowers that the banks deem to be of special risk, the New York Times reported. These borrowers, who have not defaulted on their mortgages or asked for help, have so-called pay option adjustable rate mortgages, which were popular in the late stages of the boom, and which lenders now deem to be especially troublesome.
Borrowers receiving unsolicited relief from JPMorgan can’t help but suspect a trick, according to the Times. Cutting loan balances, even for loans in default, is extremely rare. [more]