Over the past week or so Bank of America began telling a select group of its warehouse lending clients that their lines would terminate within 30 to 90 days.
A B of A spokesman confirmed the information to National Mortgage News, adding that the bank will shift its warehouse clients over to its global banking unit housed under Merrill Lynch in New York.
He said “a lot of factors” are driving the decision to cut certain nonbank customers, though he declined to be specific about those reasons. “A majority of the business will be shifted over,” he said but declined to give exact percentages.
B of A has just under 200 warehouse clients.
The division employs roughly 75 full-time workers, a majority of which will transfer to the global banking unit.
Michele Perrin, a warehouse lending consultant said firms with “the most net worth and cash are getting replacement lines pretty easily but the ones who are running at higher leverage or who have repurchase issues are struggling.”
She said some warehouse lenders are “being picky” about which B of A customers they will extend credit to.
As reported by NMN a few weeks ago, People's United Bank, Bridgeport, Conn., has picked up several former B of A warehouse clients.
Early in the fall the bank made the strategic decision to close its correspondent lending division which worked closely with the warehouse group. Roughly 1,200 workers were employed in correspondent services. The bank's spokesman said 1,000 of those employees have already found new jobs in other parts of the bank.
