When it comes to mortgage banking, Bank of America hasn't had a good month.
Over the past few weeks it has suspended cash-out refis on government loans, announced that the sale of its correspondent division had fallen through and lost one of its top retail loan officers to a competitor.
It's no secret that B of A is de-emphasizing mortgages, but through the morass of its restructuring it has always maintained its commitment to retail lending. But then, about 10 days ago, it confirmed an inquiry by this newspaper that it was exiting six small loan volume states, which sent tongues wagging in the industry.
If you combine the departure of top producer Kevin Budde with the news about the six states, one might assume that B of A isn't really committed to retail mortgage banking—even though it says it is.
But the bank insists that it is indeed committed to retail—it just doesn't care all that much about its industrywide market share anymore. Who says so? Answer: The bank.
In an interview with NMN B of A's top consumer sales executive for mortgages Matthew Vernon said the bank's goal as a retailer is to serve as many of its 58 million banking customers as possible. “That's the [market] share that we want to drive north,” Vernon said.
He is quick to point out that the idea of achieving market share dominance is something that Countrywide Financial Corp. emphasized greatly. But unlike some at B of A, Vernon is not a disciple of former CFC founder Angelo Mozilo, a man who preached market share dominance with great fervor.
Vernon is a B of A veteran who started his career at the bank in 1994 as a management associate in Baltimore.
“The old Countrywide branches—their strategy was to focus completely on market share,” he said. “Our strategy is about customer share, serving those 58 million Bank of America customers.”
In short, the bank's goal is to develop what it calls “quality” relationships with all bank clients, whether they have a checking account with B of A or a brokerage account with Merrill Lynch.
Among other things, it wants to cross-sell other products to its mortgage customers. “The mortgage is a core product for us,” he said. “You can't have a customer-driven organization without having the mortgage as a product.”
The latest rankings show that the bank's strategy, at least in terms of industry market share, is working. In the second quarter B of A dropped to third among all retail funders, behind Wells Fargo and JPMorgan Chase. (Over the past three years it has ranked either first or second in retail.)
As for the bank's nationwide sales force of 4,000 LOs, Vernon has a message for them: the bank has no plans to cut its workforce, even though 2012 could be a tough year for the business. “We hope to maintain that 4,000 number,” he said, “but grow in the top performer area.”
Vernon noted that he was sorry to lose Budde who facilitated $140 million of mortgages in Southern California last year. “We absolutely want to retain our top performers,” he said. “I hate to lose any of our top people.”
One of Budde's complaints about B of A centered around low long it took to get a loan through the underwriting department.
Vernon said he understands the complaint, but is loath to hire more full-time processors only to lay them off next year. “We don't want to staff up only to cut them later on,” he said.
