Bank of America Corp appointed on Friday a new foreclosure and loan modifications czar, and created a new unit to oversee problem home loans in a bid to sort out its on-going foreclosure issues, becoming the first large US bank to do so.
The new unit creates a seventh major division at the bank reporting directly to Chief Executive Brian Moynihan, an indication that the largest US mortgage service is attempting to be more aggressive in resolving its problem mortgage loan portfolio. Analysts said the move signals major US mortgage lenders have not yet turned the corner on the problem home loans on their books.
"This is a significant step. If Bank of America has these issues, what kind of problems does everyone else have?" said Matt McCormick, a Cincinnati-based portfolio manager at Bahl & Gaynor Investment Counsel Inc. The change splits the largest US bank by assets' mortgage business into two parts: One focused on current and new mortgages, and another dedicated to foreclosures and workouts.
Bank of America will promote Terry Laughlin to oversee the new unit, called legacy asset servicing. The division will have roughly 30,000 employees. Laughlin, 56, is a former FleetBoston executive who joined the bank in July 2010 as a credit loss mitigation executive, reporting to Barbara Desoer in the mortgage division.
The new unit will manage foreclosures and loan modifications, and will work to resolve mortgage repurchase claims from investors. Long term, a company spokesman said the division could dedicate itself to working out types of problem assets at the bank beyond mortgages.
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