By Sarah Portlock
WASHINGTON--As the U.S. housing market recovers from its historic collapse, the mortgage-lending industry must think about how to strike the right balance between prudent underwriting, responsible down payments and access to homeownership, Bank of America Corp. (BAC) CEO Brian Moynihan said Friday.
But any strong recovery, particularly from the foreclosure crisis, will take time and Americans must be patient, he said in a speech at the Brookings Institution.
"This will get done and the key is just to do it right for the consumer and in an empathetic, clear way," Mr. Moynihan said.
While credit is still available in the industry, he said, there is no doubt lending is tight and will continue to be so until proposed federal rules and regulation are decided and implemented.
"The near-term need is to finish the discussion around the core aspects of Dodd-Frank and get that done," he said, "and, long-term, come up with policy."
While he said he sees clarity on a series of topics in the near term, there are no straightforward outcomes going forward. He cautioned against any rules that would discourage private lenders from offering mortgages.
"We don't want to end up with any unintended consequences that prevent private capital from returning or further restrict sound lending and ultimately go counter to the reset we're trying to achieve," he said.
Bank of America, which is the second largest U.S. bank by assets, has extended more than $53 billion in mortgage lending this year to nearly 215,000 borrowers, compared to $1.3 trillion loaned industry-wide, he said.
But the bank has curtailed its mortgage operations over the past year. Mr. Moynihan has said he wants the bank to produce mortgages for customers but not create them in massive numbers and sell them to investors the way Countrywide did in the past. The acquisition of Countrywide has continued to weigh on Mr. Moynihan's tenure, sticking the bank with bad mortgage loans and legal troubles.
Generating new mortgages for home purchases for the bank is down 83% from a year ago, compared to 5% for the industry as a whole. For the first nine months of the year, nearly 80% of the bank's business is from refinancing mortgages, according to Inside Mortgage Finance, compared to 73% for the industry.
--David Benoit and Nick Timiraos contributed to this article.
Write to Sarah Portlock at sarah.portlock@dowjones.com
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(END) Dow Jones Newswires
December 14, 2012 11:57 ET (16:57 GMT)
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