Bank of America Corp. is splitting its mortgage business into two units in order to get a better handle on the flood of foreclosures.
Bank of America’s new unit, Legacy Asset Servicing, will be charged with resolving issues involving faulty paperwork that had led the bank to temporarily suspend foreclosures across the country for nearly two months in October. The new unit will also handle mortgage modifications and buyback claims on bad loans sold to investors.
Meanwhile, Bank of America’s Home Loans unit will continue to handle new loans and the servicing of current loans.
The company also said it plans to exit the reverse mortgage origination business.
Bank of America Home Loans lost $8.92 billion in 2010 and has been battered by a stream of lawsuits, mostly focused on bad loans it acquired when it purchased Countrywide in 2008.
Source: “Bank of America Splits Foreclosures, Discontinued Projects From Mortgage Lending Business,” Associated Press (Feb. 4, 2011)