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BofA’s HEL Activity Doubles as 1st Mtg Volume Tumbles

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As quarterly first mortgage originations plummeted at Bank of America Corp., home-equity production has more than doubled over the past year. Reductions in mortgage assets, servicing and staffing continued.

Quarterly earnings data released Thursday indicate that loan originations, including first mortgages and home-equity loans, were nearly 50,000 units for $13.539 billion in the three months ended Dec. 31.

Business sank compared to the third quarter, when total originations were almost 97,000 loans for $24.429 billion, and the fourth-quarter 2012, when volume came in at $22.478 billion.

But on an annual basis, BofA pushed production up to $89.776 billion from $78.659 billion.

Refinances accounted for 68 percent of activity during the latest three-month period, down from the previous quarter’s 78 percent refinance share.

Fourth-quarter 2013 volume included $1.915 billion in HELs, growing from $1.828 billion in the prior period. BofA has more than doubled its HEL production from the fourth-quarter 2012, when it funded just $0.962 billion in HELs.

The mortgage servicing portfolio finished last year at $0.8100 trillion. BofA trimmed the portfolio from $0.8894 trillion as of Oct. 31 and slashed it from $1.3318 trillion as of Dec. 31, 2012.

The report indicates that the portion of the portfolio that was serviced for investors was reduced to $0.550 trillion from $0.616 trillion three months earlier and $1.045 trillion a year earlier.

BofA’s balance sheet included $248.066 billion in U.S. residential mortgages, down from $253.409 billion at the end of the third quarter. Residential assets have been reduced from $252.836 billion as of the end of 2012.

Delinquency of at least 60 days on first mortgages was cut to 0.3 percent as of the end of last month from 0.4 percent at the end of the third quarter. The improvement was far more impressive compared to a year prior, when the rate was 0.8 percent.

The bank also owned $93.672 billion in HELs, down from $96.653 billion three months earlier and $108.140 billion a year earlier.

U.S. commercial real estate loans in the investment portfolio grew to $46.3 billion from $43.5 billion at the close of the prior quarter and $37.2 billion at the close of the prior year.

New repurchase claims received in the fourth quarter were $3.828 billion, more than the previous period’s $1.556 billion but less than the $4.423 billion in claims reported for the fourth-quarter 2012.

Outstanding repurchase claims have been reduced to $19.655 billion from $28.101 billion as of year-end 2012.

The net loss before income taxes within the consumer real estate services segment was $1.608 billion, worsening from $1.534 billion in the prior period. But the Charlotte, N.C.-based firm improved greatly on the $5.617 billion loss in the final quarter of 2012.

Pre-tax litigation expense was $2.3 billion during the final three months of last year.

Before income taxes, the bank-holding company earned $3.845 billion, not as much as the $4.845 billion earned in the third quarter. But BofA swung from a $1.904 billion loss in the fourth-quarter 2012.

In an effort to focus on direct-to-retail mortgage originations, BofA said it has located 54 percent of loan officers within its branches.

Staffing within legacy assets and servicing finished the latest period at 28,800 employees. Headcount was cut from 32,200 as of Sept. 30 — the fifth consecutive quarterly decline — and 49,400 as of Dec. 31, 2012.

The report said that headcount within the entire consumer real estate services division was down 14 percent from the third quarter “due primarily to continued reductions in legacy assets & servicing, as well as actions taken in sales & fulfillment as refinance demand slowed.”

BofA reduced its company-wide staff to 242,117 employees from 247,943 at the end of October and 267,190 at the end of 2012.

Branch count was cut to 5,151 from 5,243 as of Oct. 31.

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