A strategy implemented three years ago by Bank of America Corp. has significantly reduced its mortgage servicing portfolio, staffing and outsourced activity.
As of Aug. 31, 2012, the Charlotte, N.C.-based company serviced roughly 10.5 million residential loans for around $1.5 trillion.
Fast forward to Aug. 31 of this year, and its servicing portfolio of home loans has been slashed to approximately 6.7 million mortgages with unpaid principal balances of just $910.1 billion.
Moody’s Investors Service said in a report released Wednesday that BofA made the reductions by utilizing sub-servicing arrangements and selling mortgage servicing rights.
The ratings agency noted that BofA decided in 2010 to shed its high-risk loan portfolio. It identified half of its 13 million loans portfolio — or 6.5 million home loans — as high risk and targeted those loans for sale or sub-servicing.
Mortgage staffing at BofA — including full-time employees, contract staffing and vendor jobs — has fallen from a peak of 59,000 to just 42,000.
The number of servicing locations has been cut to 33 from 51 a year earlier. The latest number reflected centers in 13 states and eight vendor sites. More sites could be eliminated or converted to origination platforms.
While BofA previously outsourced as much as 70 percent of its primarily early stage collections activity, only 25 percent is outsourced now.
“Bank of America has executed on its strategy thus far, and if it continues its efforts, will no longer be a major servicer of delinquent loans,” the report’s author and Moody’s Assistant Vice President Gene Berman said.
