Bank of America announced that it will be dividing it's mortgage business into two distinct divisions: one division will continue issuing mortgages and the second division will be handling foreclosures & discontinued loans.
The Bank of America Home Loans Division will continue to create new loans and oversee the servicing (or monthly collections) of loans. Last year, Bank of America lent out over $306 billion to new homeowners.
Bank of America - Legacy Asset Servicing Unit
In an effort to stem the seemingly daily tide of multi-billion dollar fines and lawsuits, Bank of America is putting together a separate division who will solely focus on its distressed notes.
The bank said the new Legacy Asset Servicing unit will be responsible for resolving issues involving faulty paperwork that led Bank of America to suspend foreclosures in all 50 states in October. After reviewing procedures, it resumed the actions nationwide in December.
The legacy unit will also handle mortgage modifications and buyback claims on bad home loans sold to investors. It will be led by Terry Laughlin, who joined Bank of America in July 2010 as an executive in its mortgage unit handling credit loss mitigation strategies. http://ping.fm/fah7l
Bank of America created the Legacy Asset Servicing unit as a result to put a stronger focus on properly handling the foreclosure issues it faces. Since it doesn't appear that foreclosures will be slowing down in 2011, or anytime soon, Bank of America is committing capital and human resources to improve in an area that has been poorly operating and as such, causing Bank of America to get throttled them with lawsuit after lawsuit. (Read Bank's Bad Behavior for a brief recap).
Bank of America will exit the reverse mortgage industry, in which it had issued 100,000 of these loans, to focus on creating and managing current loans and focusing separately on handling distressed mortgages. By improving the focus on foreclosures, Bank of America hopes to service its clients better and stay out of the courts.

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