Countrywide originators: living on borrowed time?

Is Bank of America, through its planned acquisition of Countrywide Financial, getting back into the wholesale and correspondent lending game?

HousingWire's Paul Jackson -- an astute observer of the mortgage lending industry who calls the pending deal "arguably the most important event in recent mortgage banking history" -- thinks not.

For those trying to suss the deal's impact on lending (and therefore housing markets), it's an important question.

Wholesale lenders fund loans that are originated by independent mortgage brokers, often reselling them to investment banks (or Fannie an Freddie) which package them as collateral for mortgage-backed securities sold to Wall Street investors. Correspondent lenders purchases mortgage loans from other originators like banks, savings and loans, and even home builders.

Bank of America announced in October that it was closing down its wholesale lending division, having already "transitioned out" of correspondent lending. If BofA decides to do the same with Countrywide's wholesale and correspondent lending operations, loan originators will lose what was, for many, an important channel for funding loans.

Jackson notes that in January, BofA CEO Ken Lewis said the bank is "not particularly interested in the wholesale and correspondent (mortgage lending) business." At the time, Lewis also said BofA was not interested in acquiring Countrywide, but Jackson thinks that was a feint.

Jackson makes a case that BofA's sole interest in Countrywide is its servicing portfolio and retail branches. Mortgage broker and syndicated columnist Lou Barnes has expressed doubts that BofA is even interested in Countrywide's retail operations -- just the servicing portfolio.

All of these views give rather short shrift to BofA's official pronouncement on the planned deal, in which the bank says it "will benefit from Countrywide's broader mortgage capabilities, including its extensive retail, wholesale and correspondent distribution networks."

In any event, as noted in InmanBlog Friday, if the deal goes through, BofA will in fact be back in the wholesale and correspondent lending business. If doesn't want to be, it will have to exit them -- again.

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