Bank of America issued just $7.9 billion of GNMA-backed MBS in the fourth quarter, a 71% plunge from the same period in 2010, according to new figures compiled by National Mortgage News and the Quarterly Data Report.

Compared to the third quarter, the bank's GNMA business fell by almost half.

The results are hardly surprising, but when the bank recently disclosed that it would stop selling purchase money mortgages to Fannie Mae it indicated that more of its production might wind up in Government National Mortgage Association securities.

GNMA MBS are culled from FHA and VA loans, currently the product of choice for consumers looking to buy a home as opposed to a refinancing.

The bank, however, managed to grow its GNMA servicing business by 11% during the year.

Over the past two years, as part of a concerted effort to scale back its once massive residential business, B of A has shuttered its wholesale and correspondent divisions, greatly curtailed warehouse financing, halted cash out refinancings, and delayed refis for current servicing customers.

Recently it was disclosed that B of A agreed to pay HUD roughly $1 billion to resolve allegations that Countrywide Financial Corp. violated FHA underwriting guidelines. B of A bought CFC in August 2008.

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