As first reported on LUXURYBLURB a few days ago, Bank of America has exited the wholesale residential lending market, cutting off its business with mortgage brokers, the bank announced yesterday.
“After receiving $ 45 BILLION in TARP funding from the US Governemnt/taxpayers, BOFA was one of the first banks to re-pay this debt,” says Leonard Steinberg, managing director of Prudential Douglas Elliman and publisher of LUXURYLETTER.
The move came as a surprise to local mortgage providers who did business with the Charlotte, N.C.-based bank. It means that mortgage brokers and their clients will have one less option when they are looking for a loan to buy a condo or co-op in the city.
A BofA spokesperson said, given the opportunity in retail business, the bank preferred “to reallocate its resources to its retail channel and correspondent lending channel.” Less than 5% of the mortgages that the bank annually made came from its wholesale channel. In just the first six months of the year, BofA originated $145 billion in mortgages, according to trade publication Inside Mortgage Finance.
Loan applications via the wholesale lending channel were accepted through the end of the business day on Tuesday and must close by Dec. 1.
“This was not expected,” said Melissa Cohn, president of Manhattan Mortgage, adding that the bank had scheduled a conference for top mortgage brokers in the New York area and had abruptly cancelled it. “We were caught flat-footed.”
BofA’s exit follows a similar move by J.P. Morgan Chase & Co., which got out of the wholesale lending business last year.
“It’s another way for banks to cut back,” Mr. Weinstein said. Yes, but at whose expense?
Tags: Bank of America, BOFA, J P Morgan CHase, Leonard Steinberg, luxuryblurb, luxuryletter, Manhattan Mortgage, Melissa Cohn, new york real estate, Prudential Douglas Elliman, tarp
Bank of America controls more assets than any bank in the US with the exception of Citi Group.
Bofa claims to waive fees but also quote higher rates.
This is a huge blow to mortgage brokers.