Bank of America: We Need More Jumbos

Friday brought a ray of hope for battered mortgage markets, with the nation’s largest mortgage lender saying that it is looking to expand its presence in jumbo lending markets — a market that has literally seen liquidity vanish amid the collapse of much of the nation’s private-party mortgage markets. Bank of America Corp. (BAC) executive Barbara Desoer, who runs the bank’s mortgage and home equity lending operations, told Bloomberg News in an interview that a previous acquisition of Countrywide Financial “is really paying off,” and said the North Carolina-based bank was looking to expand jumbo lending. “Bank of America has balance-sheet capacity, and we’ve allocated it to jumbos given our presence in some of the states and regions where that’s important,” she told the news service. “We’re very much open for business.” It was unclear if Desoer was referring specifically to non-agency jumbo mortgages, however; the Bloomberg report — somewhat confusingly — defined jumbos as mortgages saleable to Fannie Mae (FNM) and Freddie Mac (FRE). That’s only part of the jumbo mortgage market, which traditionally has referred to mortgages above the conforming limit (hence, jumbo, or too large for the GSEs). Regulation last year created the so-called “jumbo-conforming” loan market, allowing both Fannie and Freddie to operate above their traditional $417,000 conforming loan limits in certain designated “high-cost” markets, with jumbo-conforming limits going as high as $729,750 in some areas. But the suggestion that BofA is allocating any balance sheet capacity to jumbos should come as welcome news to industry participants, regardless. Desoer said the bank has added roughly 3,000 employees to its origination unit, including about 1,000 new to the company and 500 shifted from its home-equity division, plus temporary workers; the bank’s mortgage staff now totals roughly 25,000, a bank spokesman told Bloomberg. Write to Paul Jackson at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.