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


BofA's Mortgage Unit Turns In Mixed Performance

2nd quarter originations up 18% from Q1

July 18, 2012

By MortgageDaily.com staff


Quarterly home-loan production grew at Bank of America Corp., though the lender will likely never recover from the loss of its correspondent lending business. Mortgage delinquency was worse as the company continues to reduce its assets. While repurchases continue to eat into earnings, repurchase losses were dramatically lower than a year ago.

Mortgage originations totaled $18.935 billion during the second quarter, the Charlotte, N.C.-based company reported Wednesday.

Business grew from $15.998 billion in the first quarter but has plummeted from the $41.424 billion originated a year earlier. The year-over-year decline reflected the October 2011 decision to close the correspondent lending unit -- which generated $21.8 billion in business during the second-quarter 2011.

Total second-quarter 2012 volume included $18.005 billion in first mortgage production and $0.930 billion in home-equity loan originations. HEL business was up from $0.760 billion during the first-three months of the year.

Around $14.930 billion of the latest quarter's activity was generated from the consumer real estate services unit, while the rest was originated by the global wealth and investment management division.

The total mortgage servicing portfolio finished June at $1.5864 trillion. The portfolio was trimmed from $1.6967 trillion at the end of March and has been reduced from $1.9913 trillion as of the same point last year. The June 30 number included $1.2 trillion in loans serviced for investors, down from $1.3 trillion at the end of the first quarter and $1.6 trillion at the same point last year.

Residential loans on BofA's balance sheet edged down to $252.635 billion from $256.431 billion three months earlier and $266.333 billion a year earlier. HEL assets fell to $118.011 from $121.246 billion and were $130.654 billion as of June 30, 2011. Discontinued real estate assets slipped to $10.059 billion from $10.453 billion and have been cut from $12.003 billion a year prior.

Residential delinquency of at least 30 days deteriorated, rising to 2.27 percent from the first-quarter rate of 2.16 percent. But delinquency has been reduced from 2.52 percent in the second-quarter 2011.

HEL 30-day delinquency fell to 1.1 percent from 1.2 percent and was 1.4 percent in the same quarter last year.

Commercial real estate loans on the books have contracted to $36.535 billion from $38.049 billion at the end of the first quarter and were $44.028 billion in the second-quarter 2011.

After adding $0.4 billion in provisions for representations and warranties and charging off $0.2 billion, BofA's repurchase liability finished last month at $15.943 billion. Outstanding repurchase claims grew to $22.7 billion from $16.1 billion as of March 31. The June 30 figure included $11.0 billion in outstanding claims from Fannie Mae and Freddie Mac, $8.6 billion in private party claims and $3.1 billion in monoline claims.

"FNMA's repurchase requests, standards for rescission of repurchase requests and resolution processes continue to be inconsistent with their own past conduct and our interpretation of our contractual obligations," the report said. "These developments have resulted in an increase in claims outstanding from the GSEs. (We remain in disagreement with FNMA over claims submitted.)"

Mortgage banking income edged up to $1.7 billion in the second quarter from $1.6 billion three months earlier. A year earlier, the unit had a huge $13.2 billion loss that reflected a $14.0 billion representations and warranties provision. More recently, repurchase provisions edged up to $0.4 billion in the second quarter from $0.3 billion three months prior.

But overall earnings from consumer real estate services was a $1.2 billion loss before taxes, though that wasn't as bad as the $1.7 billion loss in the prior quarter or the $21.4 billion loss in the same quarter during the prior year.

Earnings before taxes across all business units climbed to $3.1 billion from $0.7 billion in the first quarter and swung from a massive $12.9 loss in the second-quarter 2011.

Staffing in legacy assets and servicing stood at 42,400 as of the second quarter, 300 more employees than the prior period and 7,000 more than the same period in the prior year.

As of the end of the second quarter, 275,460 full-time equivalent employees were on board at the corporation, fewer than 278,688 at the end of the first quarter and 288,084 at the same point last year. In September 2011, when BofA announced that it would eliminate 30,000 company-wide jobs during the next few years, around 288,739 employees were on staff.

BofA said it operated 5,594 U.S. banking centers as of June 30, down from 5,651 three months earlier.

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