In its latest effort to slim down, embattled financial services giant Bank of America (NYSE:BAC) is reportedly attempting to unload its correspondent mortgage operations.
Through a series of moves, Charlotte-based BofA is looking to shrink itself and raise money ahead of new regulatory rules mandating big banks hold higher levels of capital.
According to The Wall Street Journal, BofA has now put on the block its correspondent mortgage business, which employs about 1,000 people and accounted for 47%, or $27.4 billion, of its mortgage originations in the first quarter.
The decision to exit the business was reached four to six weeks ago in the wake of a review led by Barbara Desoer, Bofas mortgage chief, the paper reported. That review found the correspondent chanel isnt central to BofAs long-term goals.
BofA has bulked up on mortgages over the years through the correspondent channel, which enables it to buy loans that were funded by smaller players.
Second only to Wells Fargo (NYSE:WFC), BofA held a 24.3% share in the correspondent market in the first quarter, according to the Journal.
However, it has run into a flurry of headaches in the mortgage business due to the implosion of the subprime market. These problems were exacerbated by the disastrous decision to buy mortgage giant Countrywide Financial in 2008 before the financial markets nearly collapsed.
BofA has fallen behind other big banks in reaching capital levels required by Basel III in 2013.
BofA has made a number of other moves in recent weeks to shore up investor confidence, including landing a $4 billion investment from billionaire investor Warren Buffett and selling half of its stake in China Construction Bank for $8.3 billion in cash.