Aiming for a “new run” at the mortgage business, Bank of America is planning for a comeback in home loans, the Wall Street Journal reports. The shift comes less than two years after a marked pulling back from mortgage lending following the housing crisis and ongoing mortgage settlements to offer borrower restitution and compensation for faulty lending practices.
The former reverse mortgage lender closed its reverse department in 2011, stating a need to focus on its core business. Whether it will reenter the market is unknown, but executives told the WSJ the company is making a stronger play in mortgages going forward.
Less than two years after embarking on a painful retreat from home lending, Bank of America Corp. BAC -4.24% is girding for a new run at the U.S. mortgage business. Whether that gamble pays off will depend in large measure on how long the mortgage market’s run of record profits continues.
The Charlotte, N.C., company aims to sell more mortgages through its 5,000-plus branches, executives said. The fourth-biggest U.S. mortgage lender, after Wells Fargo WFC -0.03% & Co., J.P. Morgan Chase JPM -0.45% & Co. and U.S. Bancorp, USB -0.51% is intent on “growing that business,” Chief Executive Brian Moynihan said at a December investor conference.
The decision is Bank of America’s latest about-face in a business that the company once sought to dominate. It also underscores the plight of many U.S. banks, which are struggling to find profitable businesses in the face of a sluggish economy, tougher regulation and hefty legal costs.
Bank of America’s $2.5 billion purchase of Countrywide Financial Corp. in 2008 briefly made it the top U.S. home lender before the housing market crash saddled the company with billions of dollars in losses.
Written by Elizabeth Ecker