Bank of America Quits Reverse Mortgage Lending, Creates Foreclosure Unit

February 7, 2011 No Comments »

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Bank of America said last week that it will no longer originate reverse mortgages, according to a company release.

The bank and mortgage lender got into the reverse mortgage business back in 2006, and expanded its presence in subsequent years with the acquisitions of Reverse Mortgage of America and Countrywide.

But its short run has come to an end, as the company looks to focus on its “core mortgage operations.”

“We made the strategic decision to exit the reverse business due to competing demands and priorities that require investments and resources be focused on other key areas of our business,” said Doug Jones, Consumer Sales and Institutional Mortgage Services executive for Bank of America Home Loans, in a statement.

Reverse mortgages came under fire recently after Consumer Reports referred to the types of loans as a “last resort.”

Bank of America Foreclosure Unit Created

A newly formed unit called Legacy Asset Servicing has also been established to service all defaulted loans (foreclosures) and discontinued residential mortgage products.

It will also be responsible for overseeing the bank’s loan modification program and resolving residential mortgage representation and warranties repurchase claims, which have been plenty.

Through 2010, Bank of America has completed more than 775,000 permanent loan modifications, including more than 100,000 through the Home Affordable Modification Program (HAMP).

The company originated $306 billion in mortgages to 1.4 million customers last year, including $85 billion in the fourth quarter.

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