Changes afoot as BofA tries to limit correspondent-mortgage losses

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.

“We’re taking a very close look at the types of activities we’re originating and servicing, so on the front end, you’ll see actions where we look to scale back,” CFO Bruce Thompson said. [Bloomberg]