Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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BofA to Exit Mortgage Wholesale Business

Bank of America Plans to Exit Consumer Mortgage Wholesale Business by 2008

NEW YORK (Associated Press) - In addition to scaling back its investment banking operations, Bank of America Corp. is exiting the wholesale mortgage business and eliminating about 700 jobs, according to bank officials Thursday.

The move will eliminate the jobs in the bank's consumer real estate unit. The bank shared details of the decision with The Associated Press before its public announcement scheduled for Friday.

The cuts are part of a 3,000-job reduction engineered by CEO Ken Lewis after the nation's second-largest bank reported a huge decline in third-quarter earnings.

"When Ken talks about a top-to-bottom review in five days time, you can't make that happen. These cuts were in the works, and expect more," said Tony Plath, an associate professor of finance at the University of North Carolina at Charlotte. "Don't underestimate the depth of Lewis' disappointment in earnings, this guy is pissed."

Bank of America employees in several consumer real estate locations _ including Dallas, Richmond, Va., and Brea and Rancho Cordova, Calif. _ will have the opportunity to apply for open positions within the company, bank spokesman Terry Francisco said.

The bank started informing affected employees Thursday. Bank of America's consumer real estate division employs about 13,000 people and it works with about 7,000 independent brokers.

"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," said Floyd Robinson, Bank of America's president of consumer real estate and insurance services in a statement.

A manifestation of that retail strategy, especially during a downturn in the U.S. mortgage market, has been the development and successful execution of its national "no-fee" mortgage program.

The nation's financial institutions have been squeezed as a credit-crunch and defaults in subprime loans have caused investors to become hesitant about taking risks. Dozens of home lenders halted operations this year and are being slammed as housing prices continue to slide. An increase in defaults have forced banks to tighten lending standards.

Bank of America's product, which was introduced in May, does away with the collection of borrower, lender and third-party fees that typically add a few thousand dollars to the price of buying a home. That product has produced more than $50 billion in application volume in the past six months, according to the bank.

Such a product, Robinson said, has enabled Bank of America to "gain critical market share."

In the third-quarter, Bank of America's overall first mortgage funded production increased 27 percent when compared with the same period last year. Driving that overall increase was a 60 percent spike in funded mortgage originations through banking centers and a 26 percent increase in funded originations by mortgage loan officers, the company said.

"Ken says he likes the retail business, he likes getting to know customers, underwriting, and managing his risk," said Plath, the university professor. "He just doesn't like the securitization and servicing sides of the business."

He may not like it, but he is willing to form an alliance and help it.

In August, Bank of America invested $2 billion in Countrywide Financial Corp. _ the biggest U.S. home lender _ when the Calabasas, Calif.-based company was running short of cash.

Countrywide is among the dozens of mortgage lenders that have battled a spike in mortgage defaults and foreclosures, especially in subprime loans _ those made to borrowers with weak credit.

Those specific problems haven't extended to Bank of America, which exited the subprime lending market in 2001 when Lewis took over as chief executive. The bank called it a business that had "become unattractive from a risk-reward standpoint."

In recent months, Lewis has pushed his bank to improve its market share of prime mortgages, or those offered to borrowers with a solid credit history, and industry experts believe it's a market the bank has yet to fully tap.

As of Sept. 30, Bank of America held a residential mortgage portfolio of $274 billion and has a stated aim of doubling its current 5 percent share of the direct-to-consumer mortgages in the next three years.

As the nation's largest retail bank, Bank of America offers several ways for customers to apply for mortgages. The bank has 10,000 personal bankers in nearly 6,000 banking centers across the U.S. and 2,200 mortgage loan officers serving 33 states and the District of Columbia, along with a phone channel known as LoanLine, and its Web site.

"We see a lot of opportunities in growing our retail business," Francisco said. "By exiting wholesale mortgage we are putting our full focus in one area, not splitting it."

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