Problem assets will be pulled from Bank of America Home Loans and placed in a newly created unit. The head of the new operation will also be responsible for resolving repurchases. The move is similar to one made by Citigroup Inc. in 2009.
In an announcement Friday, BofA said that it has established a legacy asset servicing unit.
The new operation will handle servicing for all defaulted loans and discontinued residential mortgage products.
“The decision is the latest in a series of significant actions taken to resolve outstanding mortgage-related issues,” the statement said.
The move is similar to one made in 2009 by Citigroup Inc., when it created Citi Holdings to house troubled mortgage assets. While an eventual spin-off was planned for Citi Holdings, no such deal has occurred.
Heading up the new unit is Terry Laughlin, who will “oversee the bank’s mortgage modification and foreclosure programs, and continue to be responsible for resolving residential mortgage representation and warranties repurchase claims.”
Laughlin reports directly to Bank of America Corp. Chief Executive Officer Brian T. Moynihan, a spokesman for the company said.
Bank of America Home Loans President Barbara Desoer will continue in her position overseeing around 12 million current mortgages. Desoer also reports to Moynihan.
In addition to being relieved of the problem loans, Desoer will no longer have to deal with Balboa Insurance, which the company said is being sold. The statement also noted that she will lead efforts on issues such as housing finance reform and the future of Fannie Mae and Freddie Mac.
While Laughlin will focus on legacy mortgage issues, Desoer will focus on the future of the mortgage business.
Former Saxon Mortgage president and CEOÂ Anthony Meola has been hired as a default servicing executive at the home loans unit, according to today’s statement.
In addition, Eric Tellhohann has been assigned to a credit loss mitigation position. Tellhohann was previously chief financial officer of BofA’s consumer and small business bank.
