NEW YORK (
Bank of America
(BAC - Get Report)
will stop buying mortgages from other banks -- a business that accounted for $180 billion worth of home loans, or half its mortgage volumes last year.
| The bank will shutter its correspondent mortgage unit.
"We'll have smaller volume going forward, but it's the kind of volume we want," says spokesman Terry Francisco, who explained that when Bank of America buys mortgages originated by other lenders, "the customer isn't choosing us, so we don't see an opportunity to deepen the relationship."
The bank "talked to several different parties" to try and sell the business, but "couldn't find a suitable buyer," says Francisco, who declined to say whether there was anything beyond price considerations in determining what Bank of America considered suitable.
Fortress Investment Group
(FIG - Get Report)
had been eyeing the assets but couldn't come to terms with Bank of America on price, according to
National Mortgage News
. An email to a Fortress spokesman was not returned.
The so-called correspondent mortgage unit, which had 1400 employees in August, is now down to 1200, led by John Dixon. It hasn't been determined what they will do next, Francisco says, though for the moment they are focused on winding down the business. The bank will look to redeploy as many employees as it can elsewhere in the bank, Francisco says.
Bank of America has been selling off and winding down several businesses as it tries to defend itself against investor concerns about its exposure to problem mortgages and the related regulatory and legal fallout.
CEO Brian Moynihan announced Bank of America will eventually shed 30,000 positions over the next few years as it looks to slash expenses and shore up its balance sheet to meet new tougher new capital requirements.
Written by Dan Freed in New York