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Bank of America is facing an exodus in its mortgage business.
Dozens of people have quit this year, according to four current and former mortgage bankers, with two of them suggesting the resignations have now climbed above 100. More departures are expected at the end of June, when the bank pays out its next quarterly bonuses, one of the people, who has spoken with colleagues about it, said.
The salespeople are leaving because they’re frustrated over a series of changes the bank made to its mortgage policies that have made it harder for some salespeople to make money and increased concerns about corporate surveillance, the people said.
The changes have also knocked Bank of America down several notches in the ranks of the biggest home-loan originators, according to data compiled by Inside Mortgage Finance. Bank of America’s 2008 purchase of Countrywide Financial Corp. briefly created the nation’s largest mortgage lender and servicer, though it also saddled the bank with years of problems and billions of dollars in fines and settlements over Countrywide’s lending practices.
CEO Brian Moynihan dialed down risk and largely avoided buying loans from third parties like mortgage brokers. Nonetheless, the bank remained a large lender for many years after the financial crisis. In 2019, it ranked sixth, Inside Mortgage Finance data showed.
But last year, it fell to 11th nationally, with just $69 billion in home-loan originations amid a refinancing tidal wave.
Susan Atran, a spokesperson for Bank of America, said there had been normal attrition at the bank over the past year but didn’t cite any figures.
Bank of America isn’t alone in enacting strict compliance regimes. Regulators and politicians, including Sen. Elizabeth Warren, have been so tough on banks that the institutions are wary of compliance breaches that could come from having a large and untethered salesforce, according to Christopher Whalen, a longtime banking analyst and a Bank of America customer. That puts them at a disadvantage to nonbank lenders who can move faster, he said.
“The culture of sales and execution and customer service has been dumbed down,” Whalen said. “The nonbanks are so much more responsive and so much more able to execute on any mortgage,” he said, adding that the “hyperefficient nonbanks are just killing the banks.”
Whalen added that if Bank of America really wanted to be competitive in the mortgage business, it would do more to support its mortgage salespeople.
Last year, Whalen said he wanted to purchase a new home and went shopping for a mortgage. He called his Bank of America rep and another salesperson at a nonbank lender. The bank scheduled a meeting with him for the following week, while the salesperson at the nonbank lender had a preapproval letter for Whalen the following day.
“It’s more of the great mediocrity under Brian Moynihan,” Whalen said. “If you were a producing loan officer, and you had a good book of business on the retail side, why on earth would you stay at Bank of America? There is no reason.”
The credit-solutions advisor
Atran, the Bank of America spokesperson, said the company aimed to serve its 33 million retail clients efficiently and responsibly, and to reward them for the full breadth of the financial relationship they have with the bank.
“We do so while managing risk appropriately, providing career growth and development opportunities for our employees, and growing our business responsibly and sustainably,” she said.
Many banks that originate mortgages have at least two types of salespeople — those who work in centralized locations and handle phone, email, and walk-in inquiries, and those that are out in the field meeting with realtors, builders, and other referrals sources.
Bank of America has three. There are those assigned to bank branches, which make up the largest group; those assigned to the wealth-management business, either Merrill Lynch or the private bank, the second biggest; and then a much smaller group of people who work in the field and act more like independent bankers.
Last year, the bank began moving its branch-based mortgage salespeople into a new role requiring them to handle auto and credit-card loans in addition to mortgages. The new role has come with a new title: credit-solutions advisor.
It also came with a new compensation structure, moving these employees to a salary and quarterly bonus structure from a monthly commission. The bank provided data suggesting that for some people, it might end up being more lucrative, but the four people Insider spoke with said they quickly realized it would mean less money over time for them and others.
Bank of America now ties the bonus more closely to the performance of the branch to which the CSAs are assigned. The idea, according to one of the people, is that the CSAs get a benefit from internal referrals that come through the branch and therefore shouldn’t get paid hefty commissions for loans they didn’t source themselves.
Many salespeople didn’t like the uncertainty of commissions and preferred the more stable compensation structure, according to the company spokesperson.
According to a testimonial collected from a training session and provided by Bank of America, one CSA in New England said they liked being the single point of contact able to sell a host of financial products.
“When we began piloting the new credit-solutions-advisor role two years ago, in response to client needs, nearly 1,000 employees raised their hand to opt in, causing us to speed up the pilot,” Atran said.
In some corners of the bank’s mortgage business, particularly among the wealth-management salespeople and the self-sourced employees who work in the field, the changes were met with derision. Few people made the change, and some began to look for opportunities outside the bank, according to four people.
Salespeople who think about their business as an entrepreneur running a small business objected to the changes, two of the people said. They can often bring in bigger loans because of their relationships, and as a result, they prefer an arrangement where they get paid based on their own production.
“It’s not a well-thought-out strategy,” one of the salespeople, who left earlier this year, said. “The guys at the banks, the overall opinion is they are just sitting there punching their information into a computer. There is a skill level and talent that needs to be there to foster customer relationships.”
No more pricing exceptions
Last year, during the pandemic, according to the people who spoke with Insider, Bank of America took steps to make its loan products less competitive with the rest of the industry, raising rates and down-payment requirements.
Around May 2020, Bank of America raised rates by as much as 1 percentage point over what some competitors were offering, two of the people said. It also basically shut down price exceptions, when it matches a competing offer for a lower rate, they and two others said.
Wells Fargo, Insider has previously reported, took similar steps, though it largely maintained its place near the top of the rankings.
After Merrill Lynch’s wealth-management staff griped, the company instituted a rule that pricing exceptions would be allowed if the customer had $500,000 or more at Bank of America, one of the people said.
The bank also raised down-payment thresholds, requiring 30% for any loans above $1 million and 40% for loans above $2 million, two of the people said.
The people Insider spoke with said they didn’t know why Bank of America raised its rates or down-payment requirements but surmised that it was simply because the bank wanted to slow down mortgage lending.
With the coronavirus pandemic raging and many people confined to their homes, millions of borrowers lost the income required to pay back their loans. Lenders including Bank of America set aside more money for loan losses and took a more cautious approach to making new loans, uncertain of when the pandemic would end or what borrowers would be able to afford once it did.
Salespeople object to recorded lines
The mortgage business is overseen by Steve Boland, who as the president of retail leads the bank’s consumer-lending unit. Boland, who sits on the executive committee, assumed his retail role in June. He’s been at BofA since at least 1997.
In November, Boland’s mortgage execs assigned a recorded phone line to every salesperson and directed them to use it exclusively for business-related calls. Salespeople are required to make at least nine calls each week on that recorded line. A recent change dictated that the salesperson had to make as many calls as new customers they picked up that week, one of the people said.
“They feel that now everybody is working remotely, everyone is doing telesales,” one current employee said. “The thing they failed to realize is that many of us have our own personal cells and have had them for many years, so all the customers call us.”
With the recorded line has come a script outlined in the Salesforce program that salespeople use to keep track of their customer relationships.
According to one script viewed by Insider, salespeople are instructed to start the conversation with at least 18 words of introduction and identification, including name, company, Nationwide Multistate Licensing System & Registry number, and recorded-line status. Initially the instructions for loan officers said the script needed to be “read verbatim,” according to one person; it now says “read with strict intent.”
The practice interrupts the natural flow of client conversations, and it’s led many salespeople to look for workarounds. Many still use personal cellphones to contact clients, for example, and use the recorded line to make calls they know will go to voicemail, two of the people said.
One person said he’d heard of salespeople holding a conversation with a client on a personal cellphone and then telling the client they have to call them back from the recorded line to meet their quota. The resulting conversation, the person said, is thus effectively staged for anyone listening to the recorded line.
“I have a group of customers where I told them, ‘Hey, go ahead and send me to voicemail when you see that number pop up,'” one salesperson said. “That way I can get through my calls.”
Reassigned to handle PPP loans
Last year, Bank of America reassigned the branch-based salespeople to help process Paycheck Protection Program loans, the government program set up to help give rescue financing to small businesses harmed by the pandemic-induced economic slump. The bank assigned 10,000 people across the company to work on the program.
To make it up to them and reflect the fact that they pulled back on lending for other salespeople who weren’t reassigned, Bank of America paid guarantees based on an average of their prior mortgage-sales commissions, three of the people said.
Initially, people internally viewed the guarantees favorably, one of the people said. Then the bank removed the guarantees for the wealth-management salespeople, three people said. And others began to chafe under a different role.
“We implemented a guarantee to support our employees due to the economic impacts of the pandemic,” Atran, the spokesperson, said. “The guarantee was eliminated as economic conditions improved.”
Some of the people who spoke with Insider said they thought the bank may be intentionally pulling its salespeople closer to a more centralized sales force that it could better monitor and control. That’s all well and good, they said, but it will likely make it harder to bring in big loans, which require specialized knowledge and key relationships.
“Some people,” one of the people said, “have actually left because of this thing.”
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