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Massive Mortgage Loss as Originations Sink at BofA

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Driven by a huge repurchase charge, Bank of America Corp.’s mortgage unit had a huge loss. Quarterly mortgage production, meanwhile, was down nearly 30 percent, and the servicing portfolio fell below $2 trillion.

Home-loan originations were $41.4 billion during the three months ended June 30, the Charlotte, N.C.-based institution reported Tuesday. Business tumbled from $58.5 billion in the first quarter and plummeted from $74.1 billion in the second-quarter 2010.

Included in the production numbers were $1.1 billion in home-equity loans, falling from the first quarter’s $1.7 billion.

The total mortgage servicing portfolio finished June at $1.9967 trillion, lower than $2.0280 trillion at the end of March. At the same point last year, the portfolio totaled $2.1276 trillion.

The third-party portion of the servicing portfolio was $1.578 trillion, lower than $1.610 trillion on March 31.

The consumer real estate portfolio closed out the second quarter at $409.0 billion, a little higher than $408.3 billion three months prior. The June 30 figure included $266.3 billion in residential loans, $130.7 billion in HELs and $12.0 billion in discontinued real estate loans.

Residential delinquency of at least 30 days was 10.55 percent, deteriorating from the first quarter’s 10.45 percent. The increase was attributed to the repurchase of delinquent loans. The default rate was 9.18 percent in the second-quarter of last year.

The bank noted that excluding FHA and other fully insured home loans, the rate of delinquency was just 2.52 percent.

HEL delinquency, excluding government-backed mortgages, fell to 1.4 percent from 1.5 percent in both prior quarter and the year-earlier quarter.

Commercial real estate holdings declined to $44.0 billion from $47.0 billion in the first three months of this year.

Losses at the consumer real estate services business leapt to $14.5 billion from $2.4 billion three months earlier and $1.5 billion a year earlier. The poor showing reflected $14.0 billion in representations-and-warranties provisions.

At the end of the second quarter, the company had $11.6 billion in outstanding repurchase claims, less than the $13.6 billion balance at the end of the first quarter.

However, BofA explained that it has taken “important steps to address a substantial portion of our mortgage-related matters.”

Earnings after taxes but before preferred stock dividends at the parent company swung to an $8.8 billion loss from the prior quarter’s $2.0 billion profit. Net income a year prior was $3.1 billion.

BofA employed 287,839 people across all business lines, more than 288,062 at the end of March.

Branch count at the bank was 5,742 as of the end of last month.

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