By now, most of you have probably heard the announcement from Bank of America (BofA) that they are exiting the correspondent lending business.
This was certainly big news, but not wholly unexpected (by us and many other lenders).
There is plenty of speculation as to why they are making this move. BofA’s “official” spin is they want to focus on their core businesses.
My personal view is they want to distance themselves from the absolute debacle known as Countrywide.
So what does this mean for us?
BofA has played a big part of our total investor makeup. There is no downplaying this fact.
That being said, we are seeing more bank and non-bank entities expressing interest in entering into the correspondent business.
Some have already made the move, and the BofA announcement to exit the space will certainly propel others to jump in.
Because of our 23 year reputation in the market we are generally one of the first lenders contacted when a new investor is looking to get into Arizona.
I am confident we will replace most, if not all, of what BofA could do for us as a mortgage banker.
I am copying below a Q&A that BofA sent to us. Enjoy the spin.
Feel free to call me with any questions . (I mean that!)
Laurie Lawton Scott
Sr. Mortgage Consultant
602.329.2950 or 928.899.0870
Why is Bank of America considering selling some or all of the IMS business?
We are proud of the success we’ve achieved in our IMS business. This strategic action is intended to increase our ability to acquire and deepen customer relationships through our leading direct-to-consumer channels, including Retail and Centralized Sales and Banking Centers.
What are the assets Bank of America is considering selling?
We intend to sell all or parts of the IMS business. The sale would focus on the originations operations, including technology, workforce and client relationships. A sale would not include loans currently in our portfolio.
How would a potential sale affect current Correspondent Lending clients?
While we seek a sale, our CL operations will continue business-as-usual. In the event we move forward with a sale, the subsequent transition will be managed with a focus on minimizing impact to clients and associates. If a suitable deal is not identified, Bank of America will explore other alternatives for the unit.
Are there any third parties currently interested in buying CL?
Yes. We are in active discussions with a third party regarding the sale of the business.
Is the potential buyer interested in acquiring the whole business?
Given the active nature of the discussions, we cannot comment on specifics.
What’s the size of Correspondent Lending?
Correspondent Lending has approximately 800 clients. It bought approximately $176 billion in closed loans in 2010 .The business employs approximately 1,200 associates.
How does the market replace the liquidity provided by CL? Won’t this move hurt the mortgage operations of many small and independent lenders?
There are other major lenders active in the IMS market and several companies have announced plans to enter the market. As economic conditions improve, more companies would expect purchase mortgage demand to increase, and with it firms to provide financing.
If Bank of America cannot agree to a sale to a third party, how long does it expect to operate Correspondent Lending?
We expect to operate the unit until the end of 2011.