Oct. 9 (Bloomberg) -- Bank of America Corp., the nation's second-largest bank, is gaining market share in home lending because of a ``flight to quality'' and the popularity of a mortgage that features no closing costs, the bank's top mortgage executive said.

The bank had 8.1 percent, the industry's largest market share, of first and second mortgage loans made directly to consumers during the second quarter, Floyd Robinson, president of the Charlotte, North Carolina-based company's home loan business, said in an interview. The bank's share of total U.S. mortgage originations increased to 7.1 percent as of June 30, up from 5.7 percent a year earlier, Credit Suisse analyst Moshe Orenbuch said in an Oct. 2 report.

Bank of America began offering on May 7 a no-fee mortgage whose interest rate covers upfront charges and insurance costs. Applications for the mortgage, which does not require private insurance, are 65 percent ahead of projections although the housing market is slowing, Robinson said.

``There is a flight to quality in mortgages right now, not only because of the Bank of America brand name, but also because of the quality of this product,'' Robinson said. Rivals have not matched the bank's offering, he said.

The bank's delinquency and foreclosure rates remain ``very similar'' to a year ago even as a record number of Americans faced foreclosure at the end of the second quarter, Robinson said. ``We're not seeing any major deterioration,'' he said, noting Bank of America stopped lending to the riskiest borrowers more than five years ago.

Ranked Fifth

The 10 largest mortgage lenders captured a combined 70 percent of U.S. mortgage originations in the second quarter, up from 58 percent a year ago, Orenbuch said in his report. Bank of America ranked fifth after Countrywide Financial Corp., Wells Fargo & Co., the CitiMortgage unit of Citigroup Inc. and the Chase Home Mortgage unit of JPMorgan Chase & Co.

Bank of America shares gained 14 cents to $52.57 at 4 p.m. in New York Stock Exchange composite trading. The stock has declined 1.5 percent this year.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net

Last Updated: October 9, 2007 17:04 EDT