4/5/13
Bank of America's market share slips in Mass. mortgage market - Boston Business Journal
From the Boston Business Journal
:http://www.bizjournals.com/boston/print-edition/2013/04/05/bank-ofamericas-shrinking-mortgage.html
SUBSCRIBER CONTENT: Apr 5, 2013, 6:00am EDT
Bank of America's market share slips in
Mass. mortgage market
Matthew L. Brown
Reporter- Boston Business Journal
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Pulling the plug on a large business unit is costing Bank of America millions of dollars in
home loan business in Massachusetts, where it continued to lose ground last year to its smaller
rivals.
For all the attention Bank of America gets for the way it has handled the modification of
troubled mortgages, its home lending operation claimed only 3 percent of the Massachusetts
market last year, down significantly from 5.2 percent the prior year. The bank lost ground to its
long-standing competitors, and it ended the year with a small, aggressive upstart breathing
down its neck.
In 2012, lenders wrote more purchase and refinance loans in Massachusetts than they had in
any year since 2007, at the start of the real estate crash. But for the top players, increases in
business volume were accompanied by a shrinking overall share of the action. That’s a trade-off
banks are happy to make in a market as crowded as Massachusetts. The rising tide lifted all
boats — except Bank of America’s.
Among 2012’s top residential lenders in Massachusetts, Bank of America was alone in showing
solid decreases in the number of purchase and refinance loans it wrote compared to the prior
year.
According to data provided by The Warren Group, a Boston-based real estate data tracker,
Bank of America originated 1,200 home purchase loans in Massachusetts last year compared to
about 2,150 a year earlier. It closed nearly 8,690 refinance loans after completing 10,350 the
year before. The total dollars loaned out fell 15 percent to $2.8 billion.
Those numbers made Bank of America the fifth-biggest residential lender in the state after
being second-biggest in 2011. The Charlotte, N.C.-based company is the largest bank, by far,
in the state based on its market share of deposits.
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4/5/13
Bank of America's market share slips in Mass. mortgage market - Boston Business Journal
Bank of America says the decline is at least partially the result of its decision in late 2011 to pull
out of correspondent lending, the practice of originating loans and immediately selling them to
investors without retaining servicing rights, spokeswoman Kris Yamamoto said. Until that time,
correspondent lending accounted for about half of the bank’s total mortgage origination
volume, Yamamoto said. Bank of America closed the correspondent banking business after it
failed to attract a buyer for the unit. The closure was part of the bank’s multiyear effort to slash
$5 billion from its annual expenses.
The drop in volume and market share puts Bank of America behind Citizens Bank, the state’s
top residential lender, as well as Wells Fargo, Sovereign Bank and Mortgage Master Inc.
Bank of America is now within striking distance of tiny Leader Bank, an Arlington-based
residential lending specialist that had 2.1 percent of the state’s home loan market while doing
$2.2 billion in originations last year — a doubling of Leader’s 2011 levels — compared to Bank
of America’s $2.8 billion.
The competition doesn’t just consist of traditional banks. The top loan originators include
online retail lender Quicken Loans, which enjoyed an increase of nearly 70 percent over
2011, and Walpole-based volume lender Mortgage Master Inc., which increased its loan
volume in the state by 41 percent from the prior year.
Leader Bank CEO Sushil Tuli said his bank does all of its lending with 50 originators in three
offices, with a mix of jumbo loans, traditional mortgages, Federal Housing Administration,
Veterans Affairs and first-time buyer loans. Leader also was the second-largest originator of
MassHousing loans last year.
Tuli said Leader had the infrastructure in place to take advantage of the recent refinancing
boom, and said big banks have seen their market share drop while small banks like his have
gained customers by stressing customer service and relationships.
Leader did $1.7 billion in refinancing volume last year, roughly double the $837 million it
reported for 2011.
Tuli predicted that this year, all banks, including Leader, will see loan volumes decline, but he
expects Leader’s market share to increase again.
The competition apparently became fiercer in 2012. With purchase loans and refinancings
combined, the top 10 residential lenders accounted for a little less than 30 percent of the
market last year, and about 34 percent the year before. Market leader Citizens saw its market
share drop to 4.8 percent from 6.7 percent, even though it produced roughly the same volume
of loans — $3.3 billion in 2012, compared with $3.1 billion in 2011.
“For banks, volume is going to drop (in 2013), but we are going to pick up market share,” Tuli
said. “We will maintain our position, (but) some banks will lose market share.”
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