Mortgage production plummeted at Bank of America Corp. as it winds down a key origination channel. The company shed some of its mortgage and servicing assets, while delinquency and earnings improved from a year earlier. But compared to just three months earlier, losses and delinquency deteriorated.
Fourth-quarter residential originations were $22.4 billion, the Charlotte, N.C.-based company said in its earnings report.
Business tumbled from $33.9 billion funded in the third quarter and was down nearly three-quarters from the $86.8 billion closed during the final three months of 2010.
Fourth-quarter activity included $0.8 billion in home-equity loan originations, off slightly from the previous quarter. In the same quarter a year previous, HEL fundings were $2.1 billion.
During all of last year, home-loan production was $156.1 billion, down by nearly half from $306.5 billion during 2010.
The severe reduction in loan closings reflects the company’s recent exit from correspondent lending, where as much as half of BofA’s production was previously generated.
First mortgages accounted for 695,000 loans originated in 2011 for $151.8 billion.
At $1.7630 trillion, the mortgage servicing portfolio was lower than $1.9174 trillion as of Sept. 30. At the end of 2010, BofA serviced $2.0568 trillion in home loans.
U.S. residential assets were trimmed to $398.1 billion from $405.8 billion outstanding as of Sept. 30.
The Dec. 31 total reflected $262.3 billion in residential loans, $124.7 billion in home-equity loans and $11.1 billion in discontinued pay-option and subprime loans.
The 30-day delinquency rate on residential loans, excluding credit-impaired Countrywide mortgages and loans insured by the Federal Housing Administration, edged up to 2.49 percent from 2.44 percent in the third quarter. Late payments were, however, down from 2.84 percent at the end of 2010.
Including FHA and credit-impaired loans, the rate jumps to 10.94 percent from the third quarter’s 10.56 percent and 9.41 percent in the fourth-quarter of 2010.
HELÂ delinquency was unchanged from the third quarter and the year-earlier period at 1.5 percent. The HELÂ rate was, however lower than 1.6 percent in the fourth-quarter 2009 and 1.9 percent in the final period of 2008.
More than a million first- and second-lien loans have been modified by BofA since 2008, the report said. The bank’s proprietary programs were used in 78 percent of the modifications.
Domestic commercial real estate assets were $37.8 billion, lower than $39.3 billion three months prior.
The consumer real estate segment had a $1.5 billion fourth-quarter loss, deepening from the $1.1 billion loss in the prior quarter. But the division cut its losses from $2.9 billion in the fourth-quarter 2010.
The year-over-year improvement “was primarily driven by a $3.9 billion decrease in representations and warranties provision and a $908 million increase in MSR results.”
Repurchase costs were $0.3 billion for the fourth quarter and $15.6 billion for the year. BofA said its repurchase reserve ended 2011 at $15.9 billion, “a significant increase” from $5.4 billion in same quarter during 2010.
Net income before taxes at Bank of America Corp. was $2.4 billion, sinking from the third quarter’s $7.4 billion but reversing a $3.6 billion loss in the same period a year earlier.
Within the consumer real estate business is legacy asset servicing. The legacy unit had a staff of 48,500 people. Employee count has climbed by 3,700 people from the third quarter, and headcount was up 13,100 from the fourth-quarter 2010.
The legacy mortgage staffing includes full-time equivalent associates, offshore associates and contractors.
As of the fourth quarter, 284,635 full-time equivalent employees worked for BofA, fewer than the 288,471 employed at the end of 2010.
BofA operated 5,702 banking centers, cutting the count from 5,856 in the fourth-quarter 2010.
