A Decision Soon on Merrill B/C Servicers

Washington-Sometime soon Bank of America will make a final decision on the fate of Merrill Lynch's far-flung mortgage units, which include two large subprime servicing companies and a Jacksonville, Fla.-based division that caters to Merrill's wealthy brokerage customers.

In a recent interview with Mortgage Servicing News, BoA mortgage chief Barbara Desoer said, "We're in the midst of making an assessment," but offered no guidance on what, exactly, the bank would do with the units.

BoA - which took control of Merrill earlier this year - already owns a large servicing operation that caters to subprime customers through its ownership of Countrywide Home Loans.

BoA is in the process of converting the bank's servicing platform over to Countrywide's. But next month the Countrywide brand name will disappear completely in favor of the nationwide brand, Bank of America Home Loans.

Merrill's subprime servicing businesses include Home Loan Services of Pittsburgh, with $28 billion in receivables, and Wilshire Credit, Beaverton, Ore., which has refused to disclose its servicing for years.

Meanwhile, Ms. Desoer said BoA is experiencing "significantly greater" residential loan volumes in the first quarter than in the fourth, but offered no guidance on fundings.

According to the Quarterly Data Report, BoA originated $49.9 billion in the fourth quarter, ranking a close second to Wells Fargo & Co.

Ms. Desoer reiterated that the bank is committed to wholesale lending but cautioned that it has "changed the terms" under which it will use loan brokers. It is asking brokerage firms to increase capital and is tightening up its loan buyback policies.

She also noted that BoA is not shying away from jumbo lending, particularly in California and the Northeast, but is placing those loans on its balance sheet instead of selling them into the secondary market where demand is scarce.

Ms. Desoer told MSN that the bank likes the warehouse lending business and has no plans to exit, but it also is in no hurry to grow its current business either. "We're getting lots of inquiries about warehouse," she said, "but we're not going to bolster it. We'll do it for the right kind of clients."

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