In the latest episode of "Extreme Bank Makeover," Bank of America (NYSE: BAC) takes a hard look at itself in the mirror and gets ready for another round of elective surgery. This time it'll be a bit of liposuction to get rid of some unsightly mortgage lending businesses.

Actually, it's not really cosmetic surgery that Bank of America is undergoing. It's a course of perhaps life-saving asset divestitures to raise the capital it needs to survive under new global banking rules.

This time it wants to get rid of its correspondent mortgage business.

Risky business
Correspondent lending is the business of buying loans made by other lenders. These loans are often riskier than those the bank would have made directly with the consumer, because loan originators have an incentive to cut corners on quality when someone else is going to be stuck with the bag. They are the types of mortgages that made up much of the toxic mortgage-backed securities that were peddled to investors as "risk-free."

But it's not clear whether Bank of America will be able to sell its correspondent lending business. Some analysts feel that it's an on-again, off-again venture, and right now it's definitely not on. The business, a part of its problem asset Countrywide Mortgage, which the bank acquired in 2008, may just have to be closed down. If so, that could mean the end of 1,400 jobs.

Loans from correspondents made up about half of Bank of America's mortgage originations in the first quarter. The bank is No. 2 in correspondent lending in the U.S., with a 23% share. The leader is Wells Fargo (NYSE: WFC) at 26.2%.

Bank of America has already gotten out of wholesale mortgage lending, that is, making loans indirectly through brokers. It has also ceased making reverse mortgages, where people -- usually elderly -- are able to pull the equity out of their homes while still living there.

Cutting away the fat
Bank of America CEO Brian Moynihan has been dropping excess weight from the bank's balance sheet since taking over from gluttonous boss Kenneth Lewis, who had gobbled up more than $130 billion in assets, including Countrywide, during his reign. Moynihan has gotten rid of more than 20 of those assets since taking over in 2010.

Next on Extreme Bank Makeover...
But will Bank of America be able to survive even if it gets down to fighting weight? Stay tuned for our next episode of Extreme Bank Makeover, when the Federal Housing Finance Agency sues more than a dozen major banks, including Bank of America, JPMorgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), and Deutsche Bank (NYSE: DB) for misrepresenting the quality of mortgage securities they sold to Fannie Mae and Freddie Mac.

Stay tuned by placing the cast of characters on your Watchlist. Just click here.