Since 1999, Thousand Oaks mortgage broker Salpi Devlin of Devlin Financial has written nearly 5,000 checks from her Bank of America business account – never a bounced check.
Indeed, she was a loyal Bank of America customer. Nothing Devlin did would have made her persona non grata.
Devlin gave Bank of America 21 years. Last month Bank of America gave Salpi 21 days to find another bank.
“I refer to it as the love letter from Bank of America,” she said.
The Bank of America letter stated in part: “Upon review of your account(s) we have determined you’re operating in a business type we have chosen not to service at Bank of America. As a result, we’ve made the decision to close your account(s).”
More shocking than the drop-dead letter was an internal BofA chart listing types of financial businesses ineligible to open an account. “Mortgage originators,” a category that includes mortgage brokers, was on the list.
You can’t operate a business without a bank account.
Devlin moved on and formally applied for a business checking account at Chase Bank. But a Chase employee told Devlin he couldn’t open an account for a mortgage broker.
Devlin then asked a friend at Wells Fargo Bank if they’d open an account for her. Her friend checked, and the answer was no.
Wells Fargo spokesperson Vickey Adams later told me that’s incorrect: “Wells Fargo Bank offers business checking accounts to mortgage brokers,” Adams said.
Chase and Bank of American never responded to questions about why Devlin got denied. But soon after I contacted Bank of America, a BofA official told Devlin her account was reinstated.
Why did this happen?
“I can’t give an explanation. I think because we are a competitor,” said Devlin. “He (the BofA representative) would not give me anything in writing. He said he couldn’t go into much detail.”
So what is going on?
Are banks trying to squeeze out mortgage brokers?
Bank of America, Chase, Citi and Wells Fargo stopped accepting mortgage broker business during the Great Recession. U.S. Bank cut off mortgage brokers about four years ago.
It’s no secret that mortgage brokers are increasing market share over depository banks.
Today, mortgage brokers account for 19-20% of the mortgage originations, said Rocke Andrews, president of the National Association of Mortgage Brokers. It was about 11-12% five years ago.
“Banks can’t compete with mortgage brokers on a consistent basis,” Andrews said.
Asked to comment on the BofA drop-dead letter, Bryan Hubbard — public affairs representative for bank regulator Office of the Comptroller of the Currency — said his agency doesn’t recommend or encourage banks to engage in “wholesale termination” of customer account categories.
“We expect banks to assess the risk posed by individual customers on a case-by-case basis,” Hubbard said.
If regulators, policymakers, Congress and our president allow banks to have unchecked broad discretion about winners and losers, businesses that banks perceive to be competition or a threat may eventually slide down a slippery slope. Just like what nearly happened to Salpi Devlin.
Do you have a similar story? If banks declined your mortgage business’ application for a checking account or cut you off, write me at firstname.lastname@example.org.
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