In these leans times, Bank of America would like to pare its retail mortgage business down to a direct-to-consumer model and jettison everything else. To that end, it has exited the reverse mortgage business and the wholesale consumer mortgage lending.

Now, Bank of America has said it would like to sell its correspondent mortgage lending unit. Whether a buyer will bubble forth is unclear right now. If Bank of America can't sell it, the bank intends to shut it down. Bank of America ranks as the second-largest correspondent lender, with a 23 percent share, second to Wells Fargo, which has a 26.2 percent share, according to Inside Mortgage Finance.

Bank of America's decision has led to some consternation among community banks and credit unions that made loans via the program. Some analysts have derided correspondent loan systems, as noted by the LA Times, saying they are essentially bucket shops producing low-quality fare. In good times, they flourish as demand is hot. But community banks and credit unions also rely on these correspondent systems, and some fear that if more big banks cut back their systems, they will be left with curtailed access to the secondary market.

Dow Jones reports that Citi and JP Morgan are among the big banks that have shrunk the size of their correspondent systems. But there are plenty of others still active, including some large regional funds. If the business ever kicks back up, we'll see these systems expand.

For more:
- here's the LA Times article
- here's the Dow Jones article

Related article:
Bank of America renounces its own testimony in mortgage case  
Bank of America exits reverse mortgage market  
Bank of America program to cut mortgage principal