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Quarterly residential mortgage production by lender. Subprime, Alt-A, home equity and conforming originations. Volume by quarter since 2003.

BofA Repurchase Charges & FHA Delinquency Worse

$86.9 billion Q4 production

Jan. 21, 2011

By staff

Even though residential originations last year at Bank of America Corp. topped $300 billion, business was off more than 20 percent from 2009. Repurchase charges nearly quadrupled -- cutting deeply into quarterly earnings. Delinquency improved during the fourth quarter and would have been better than the previous year had it not been for government-insured loans.

Home-loan production climbed to $86.8 billion in the three months ended Dec. 31, 2010, from the third quarter's $74.1 billion, the Charlotte, N.C.-based holding company disclosed in earnings data Friday. Fundings contracted, however, from $89.4 billion in the fourth-quarter 2009.

Included in the latest total was $2.1 billion in home-equity production, the same as the month before but less than $2.8 billion originated in the last three months of 2009.

First-mortgage fundings amounted to 370,000 loans in the latest period.

Loan closings for all of 2010 were $306.5 billion, according to the report. The prior year, BofA generated $391.3 billion in business.

At $2.0568 trillion, the servicing portfolio was trimmed from $2.0795 trillion on Sept. 30. The portfolio was considerably lower than on Dec. 31, 2009, when balance was $2.1508 trillion.

The portion of the portfolio that was servicing for investors was $1.628 trillion, down from $1.669 trillion at the end of the third quarter. The third-party servicing portfolio additionally closed out the year lower than 2009's $1.716 trillion.

Residential holdings rose to $258.0 billion at the end of last year from $243.1 billion at the end of the third quarter. But home-equity loans on the balance sheet fell to $138.0 billion from $141.6 billion. Another $13.1 billion was owned in discontinued mortgages, lower than $13.4 billion at the close of the third quarter.

Residential delinquency of at least 30 days was 9.41 percent at the end of last year, improving from 9.69 percent at the end of September. But late payments were worse than at the end of December 2009, when the rate was 8.00 percent.

BofA noted, however, that excluding FHA-insured loans -- the delinquency rate was just 2.69 percent at the close of last year. The non-FHA rate was better than 2.77 percent three months earlier and 3.26 percent a year earlier.

Commercial real estate assets retreated to $49.4 billion from $52.8 billion at the end of the previous quarter.

The home loans and insurance business had a $6.8 billion loss before taxes during the most recent three-month period, deteriorating significantly from the prior quarter's $0.5 billion loss. Earnings from the operation were also worse than the $1.6 billion loss a year earlier.

At the heart of the poor performance were $4.1 billion in representations-and-warranties charges, leaping from just $0.9 billion three months earlier and $0.5 billion during the final quarter of 2009. Annual repurchase charges grew to $6.8 billion for 2010 from $1.9 billion the previous year.

Fourth-quarter expenses related to just Fannie Mae and Freddie Mac repurchase claims were $3 billion.

"Bank of America believes that it has addressed its remaining exposure to repurchase obligations for
residential mortgage loans sold directly to the GSEs," the report said.

Unresolved repurchase requests were reduced to $10.7 billion at the end of last year from $12.9 billion at the end of September. But the situation has deteriorated from the end of the 2009, when only $3.5 billion was unresolved.

The mortgage unit's loss left the parent corporation with a $1.2 billion loss, though that was better than the $7.3 billion third-quarter loss but not as bad as the $0.2 billion loss suffered a year earlier.

At the end of last year, 286,951 people were employed at BofA, more than the 285,822 employees at the end of September and the 283,055 staff size of at the end of 2009.

BofA operated 5,856 banking centers on Dec. 31. The count on Dec. 31, 2009, was 6,011.

Bank of America profile

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