Bank of America Suspends New Cash-out Refinance Applications

Elevated refinance volume prompts decision

Refinance activity is so busy that Bank of American Home Loans has made the decision to turn off the spigot for cashout refinancing. It’s the second time in four months that such a move has been made.

From the end of 2011 until last week, inquiries for refinance loans climbed 107 percent, according to the U.S. Mortgage Market Index report for the week ended Jan. 13 from Mortech Inc. and MortgageDaily.com.

BofA has seen a similar surge in refinance business.

In addition, spokesman Terry H. Francisco explained in a telephone interview that the company has become fully operational with the latest version of the Home Affordable Refinance Program.

“I suspect we’re one of the first lenders to be fully operational on HARP 2,” he stated.

“So that’s caused an enormous amount of volume to come in at the same time, and so we want to be responsible in making sure that we can help as many customers as we can,” Francisco said.

The Calabasas, Calif.-based company has therefore made a decision to put the brakes on cashout transactions until the elevated refinance activity recedes.

Cashout transactions already in process aren’t impacted by the decision.

The lender’s sales force was advised of the decision late Wednesday.

Francisco said the cashout suspension will remain in place until it is clear that overall processing for non-cashout transactions won’t be negatively impacted from the resumption of cashout lending.

In October, BofA suspended cashout transactions on loan insured by the Federal Housing Administration. Elevated refinance volume was also cited for that decision.

Source: MortgageDaily.com