BofA testing investment advisers in mortgage offices

(Reuters) - Bank of America Corp (BAC.N) is putting investment advisers in mortgage offices, an unusual move that shows how far banks will go to "cross-sell" products and services to their customers.

The pilot program, in seven offices in California, is part of the second-largest U.S. bank's effort to target its more profitable "preferred" customers, who have $50,000 to $250,000 in investable assets.

For Bank of America, the pilot program could bring new revenue and aid larger efforts to turn around its disastrous Countrywide Financial mortgage unit, which it acquired in 2008. The bank on Thursday also said it was testing a program that would allow homeowners facing foreclosure to become tenants and lease their homes.

But cross-selling also could show just how different mortgage seekers are from other bank customers. Winning more business from would-be home buyers, who typically focus on landing the best deal on rates and fees, will be a tough task, said Guy Cecala, publisher of Inside Mortgage Finance, which tracks the home loan industry.

"Someone who comes in to talk about a mortgage doesn't really want to talk about something else," he said.

Still, Bank of America's program marks a new approach for an industry that has sought for decades, with minimal success, to sell additional products and services to their customers. The bank's largest mortgage competitors, Wells Fargo & Co (WFC.N) and JPMorgan Chase & Co (JPM.N), don't use that strategy.

Advisers in mortgage offices can prepare financial plans, open investment accounts or refer clients to Merrill Lynch financial advisers for more complex needs, the bank said.

"Many clients come into those mortgage offices," said Dean Athanasia, the bank's head of preferred and small-business banking, who has overseen home loan sales since January. "We want to make sure we can handle a client's needs."

Bank of America is continuing to fix its mortgage unit, which lost $19.5 billion last year, largely due to bad loans inherited from Countrywide.

Since last fall, the bank has been downsizing its mortgage origination business to focus on making loans directly to consumers, instead of using brokers or buying loans from other banks.

All banks are under pressure to find revenue as low interest rates make lending less profitable and new regulations limit fees once earned for overdrafts and debit card transactions, said Miami-based banking consultant Ken Thomas. Placing investment advisers in loan offices could be a way to wring more revenue without raising the cost of overhead, he said.

Mortgage offices are typically less costly because they are in less expensive locations and don't have the same security requirements as bank branches, he said. "It's all about using your brick and mortar more effectively," he said.

Bank of America is also putting investment advisers, small-business bankers and mortgage specialists in about 2,000 of its 5,700 bank branches.