(Reuters) - Bank of America Corp
The second-largest U.S. bank in 2008 became the biggest mortgage originator after buying Countrywide Financial, but it has been gradually paring back the business as it copes with losses from the disastrous acquisition.
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In October, Bank of America said it was exiting correspondent lending by year's end, stripping out about half of its production as it focused on making loans directly to its own customers. The bank now has about 6 percent market share, less than the 7.8 percent it held in 2007 before buying Countrywide.
That acquisition, which brought to the banks loads of bad loans and related lawsuits, has not worked out on two fronts for Bank of America, said Guy Cecala, publisher of Inside Mortgage Finance.
"Not only are they looking to abandon the servicing side of the business, they're looking to abandon the origination platform," he said.
While the bank is missing out on newer loans made under stricter underwriting standards, decreasing its profile in the mortgage business is likely good for its stock price, he said. "It will be welcomed by shareholders and analysts," Cecala said.
After falling 58 percent in 2011, Bank of America's shares are up more than 30 percent this year.
In a CNBC interview Wednesday at the World Economic Forum in Switzerland, Bank of America Chief Executive Officer Brian Moynihan said exiting the correspondent business was a good move because the company was no longer providing its balance sheet to other banks' customers.
"We've shaped our mortgage business much smaller," he said. "We've really got it back (to) our core retail customer... We'll continue to do that."
(Reporting By Rick Rothacker; Editing by Maureen Bavdek, Gary Hill)
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