Bank of America says it will stop writing home mortgages through independent brokers, who've been blamed for many of the lax practices that created bad loans and fueled huge losses that led to the economic meltdown still haunting the real estate market.
Bank of America, currently the third-biggest U.S. mortgage lender through independent brokers, said it would focus its resources on direct lending and acquiring loans from other originators.
"By exiting the first mortgage wholesale channel, we can redirect critical operational resources to further enhance our capabilities in direct-to-consumer channels," said Barbara Desoer, president of Bank of America Home Loans. "This is an investment in strengthening our competitive position by delivering on the services our mortgage customers expect from Bank of America."
Other major lenders, including JPMorgan Chase & Co., have also stopped marketing through brokers, who accounted for about ten percent of U.S. home lending during the first half of 2010, down from 31 percent in 2005.
Chase quit funding home loans through mortgage brokers in January 2009. Chase CEO Jamie Dimon said in a speech a short time later that, "my biggest mistake, probably of my whole career, was not closing down our mortgage-broker business sooner."
Citigroup began downsizing its wholesale operations in 2008.
Major lenders are facing a blizzard of litigation and investigations following disclosures that loan servicers and mortgage companies may have taken shortcuts in processing foreclosure documents.