BofA creates new unit, names foreclosure czar
Bank of America Corp appointed on Friday a new foreclosure and loan modifications czar, and created a new unit to oversee problem home loans in a bid to sort out its ongoing foreclosure issues, becoming the first large U.S. bank to do so.
The new unit creates a seventh major division at the bank reporting directly to Chief Executive Brian Moynihan, an indication that the largest U.S. mortgage servicer is attempting to be more aggressive in resolving its problem loan portfolio.
Analysts said the move is a signal that major U.S. mortgage lenders have not yet turned the corner on dealing with the problem home loans on their books.
“This is a significant step. If Bank of America has these issues, what kind of problems does everyone else have?” said Matt McCormick, a Cincinnati-based portfolio manager at Bahl & Gaynor Investment Counsel Inc.
The change splits the bank’s mortgage business into two parts: one focused on current and new mortgages, and another dedicated to foreclosures and workouts.
Bank of America, the largest U.S. bank by assets, named Terry Laughlin to oversee the new unit, called legacy asset servicing. The division will have roughly 30,000 employees.
Laughlin, 56, is a former FleetBoston executive who joined the bank in July 2010 as a credit loss mitigation executive in the mortgage division.
The new unit will manage foreclosures and loan modifications, and will work to resolve mortgage repurchase claims from investors.
Last fall the bank temporarily suspended foreclosures after critics alleged the industry cut corners on foreclosure paperwork and used so-called robo-signers, employees who signed thousands of foreclosure notices without reviewing the documents.
Separately on Friday, the bank announced it was exiting the reverse mortgage lending business.