Bank of America this week announced it is severely cutting back sales of loans to Fannie Mae. The move is part of Bank of America's (BAC) ongoing efforts to undo the damage of its ill-fated acquisition of Countrywide Financial in 2008, but could have broader implications if other big banks follow suit.
In Search of...Life Beyond Fannie & Freddie
By ending its activity in the so-called correspondent lending channel, Bank of America is effectively saying it will only underwrite mortgages that are originated in house. By stopping the sale of most loans to Fannie, the bank will either be forced to hold those loans in its portfolio or seek an alternative buyer.