Despite the fact that the Federal Reserve is pumping billions into the economy by buying mortgage bonds — making originating mortgages more profitable than ever — certain huge players continue to sit on the sidelines, namely, Bank of America, Bloomberg News reported.
“I get that they got their faces torn off,” Scott Simon, head of the mortgage division at Pacific Investment Management, told Bloomberg News, referring to losses large banks took during the Lehman Brothers debacle. “But this is a different environment.”
Bank of America’s mortgage originations were down 37 percent to $21.3 billion year-over-year in the third quarter of this year, Bloomberg said.
The winners? JPMorgan Chase and Wells Fargo, which have profited handsomely from the giant’s absence in the sector.
“If you’re Wells Fargo you sell six products to the average person who has a mortgage with you,” Simon said. “It’s unbelievable. It’s a money machine.” [Bloomberg News] –Guelda Voien