B of A loses top spot in U.S. mortgage servicing
CHARLOTTE, North Carolina
CHARLOTTE, North Carolina (Reuters) - Bank of America Corp (BAC.N) has given up the title of the largest U.S. mortgage servicer, in the latest sign the second-largest U.S. bank is pulling back from the home loan business after its disastrous Countrywide Financial purchase.
Wells Fargo & Co (WFC.N) became the top mortgage servicer at the end of 2011, with $1.82 trillion in loans serviced and 17.7 percent market share, according to a report to be released this week by industry newsletter Inside Mortgage Finance.
Bank of America, the largest servicer after buying Countrywide in 2008, held $1.77 trillion in mortgage servicing volume, followed by JPMorgan Chase & Co (JPM.N), the largest U.S. bank, with $1.17 trillion.
Bank of America, based in Charlotte, North Carolina, has been rocked by loan losses and lawsuits since buying Countrywide, once the nation's biggest subprime lender. The bank is running off troubled loans and selling off mortgage servicing rights as it looks to boost its capital measures.
Bank of America bought Countrywide in 2008 as it verged on bankruptcy amid the subprime lending collapse. The acquisition initially made Bank of America the biggest home lender, but it has been shedding market share as it wrestles with delinquent loans and lawsuits related to mortgage-backed securities.
The five largest mortgage servicers, including Citigroup Inc (C.N) and Ally Financial Inc, have been at the center of negotiations with federal officials and state attorneys general to resolve foreclosure-related abuses. States have just a few more days to decide whether to join the settlement, and an announcement of a pact could come as early as next week, people familiar with the talks said.
Wells Fargo, the fourth-biggest U.S. bank, widened its lead as the biggest originator of home loans in the fourth quarter of 2011, while Bank of America slipped to fourth in the rankings behind JPMorgan and Citigroup Inc (C.N).
San Francisco-based Wells originated 30 percent of all home loans in the last three months of the year, up from 27 percent in the third quarter, according to Inside Mortgage Finance. Bank of America slipped to fourth in the rankings from second in the second quarter, as it stopped buying loans from smaller banks.
On Wednesday, Citigroup announced it will stop originating loans through mortgage brokers, although it will continue making loans directly to customers. It will also still buy loans from other banks, known as correspondent lending.
The bank expects that most of the 300 employees in its broker-related business will find other jobs in the mortgage unit, Citigroup spokesman Mark Rodgers said.
In a research report on Wednesday, FBR Capital Markets analyst Paul Miller said Wells Fargo was the only large bank that was still pushing hard to keep a large presence in the mortgage market. The transition in the industry shows that servicing issues and investor claims to buy back soured loans are having an impact on large banks, he wrote.
"Capacity to originate loans is being ripped out, and the structure of the industry remains uncertain," Miller said. Wells Fargo and smaller banks such as Fifth Third Bancorp (FITB.O) are positioned to take advantage of the exit of other players from the business, he said.
(Reporting By Rick Rothacker in Charlotte, N.C.; Additional reporting by Aruna Viswanatha in Washington; Editing by Tim Dobbyn and Matthew Lewis)
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