In a somewhat surprising move, Bank of America is ceasing its wholesale lending business amid the ongoing turmoil in the mortgage industry.
“While we are extremely proud of our strong track record in the wholesale business, we believe our long-term opportunity lies in maximizing our more competitive retail channels,” Floyd Robinson, Bank of America’s president of consumer real estate and insurance services said in a statement.
It is believed that Bank of America will shut the unit over the next couple months, likely at year-end, with a loan submission cutoff around the end of November.
Reports have said that Bank of America will continue to accept loan submissions until November 25th, 2007 and that all submitted loans must fund by December 31st, 2007.
Bank officials have noted that around 700 jobs will be affected by the decision, though they may have the opportunity to apply for open positions within the company.
Job cuts are expected at loan centers throughout the U.S., including locations in Brea and Rancho Cordova, CA, Dallas, TX, and Richmond, VA.
The news is another blow for mortgage brokers and loan officers who are finding many of their options disappear as banks and mortgage lenders continue to drop wholesale lending to focus on a retail push.
Recent moves to stamp out wholesale lending have left very few big players in the space, with Chase and SunTrust believed to the be the most popular options left.
It appears Bank of America will focus on its network of over 10,000 personal bankers in nearly 6,000 banking centers throughout the U.S., along with its 2,200 loan officers serving 33 states.
The popularity of the Bank of America No Fee Mortgage seems to be very strong, and falls in line with their retail-centric strategy.
The no cost loan which was introduced in May has led to more than $50 billion in application volume in the past six months, according to the bank.
“We see a lot of opportunities in growing our retail business,” bank spokesman Terry Francisco said. “By exiting wholesale mortgage we are putting our full focus in one area, not splitting it.”
Look for more wholesale fallout as retail banks continue to squeeze out the competition.
Yesterday, Bank of America announced 3,000 job cuts in its investment banking division after record losses rattled investor confidence.
Shares of Bank of America (BAC) fell just over 1% to close at $47 a share, slightly above their 52-week low of $46.45.