According to a Bloomberg report, Bank of America will cease working with Fannie Mae on all home loan activities except modifications and some refinancings. The the Charlotte, N.C.-headquartered bank will continue to sell new home loans to Freddie Mac and Ginnie Mae.
Bank of America's decision follows its continuing problems with the problematic residential mortgage business it acquired from Countrywide Financial Corp. in 2008. Last November, the bank refused to accept a new Fannie Mae policy that requires loan repurchases if an insurer drops coverage.
‘This decision will not affect the credit available to our customers,’ says Jerry Dubrowski, a bank spokesperson, in an e-mailed statement to Bloomberg. ‘We will rely on other sources of liquidity to continue to ensure we are lending to our customers and supporting the housing-market recovery.’
Fannie Mae declined to comment on the news.