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HEL Business Continues Higher at BofA

Bank of America Corp., which reported a big loss on mortgage litigation expense, managed to lift home-equity production even as overall originations moved lower.

Home-lending activity from Jan. 1 through March 31 totaled more than 36,000 loans funded for $10.833 billion.

BofA laid out the operational metrics in its first-quarter 2014 earnings report released on Wednesday.

Business declined from nearly 50,000 mortgages originated for $13.539 billion during the three months ended Dec. 31, 2013.

Residential loan production has fallen by more than half compared to approximately 106,000 units $25.038 billion in the first-quarter 2013.

BofA’s volume hasn’t been this low since at least 2003, when Mortgage Daily began tracking its quarterly production.

First-quarter 2014 originations included $8.850 billion in first mortgages, down from three months earlier and a year earlier.

But home-equity originations rose to $1.983 billion from $1.915 billion in the fourth quarter and $1.118 billion in the year-prior period.

Overall business could turn higher based on the mortgage pipeline, which was up 23 percent between the end of the fourth quarter and the first quarter.

The mortgage servicing portfolio was reduced to $0.7800 trillion from $0.8100 trillion as of Dec. 31, 2013. As of the same date in 2013, BofA serviced $1.1850 trillion in loans.

The first-lien portion of the servicing portfolio was 4.2 million loans, down from 4.4 million in the previous report.

Mortgages serviced for investors accounted for $0.527 trillion of the latest total, down from $0.550 trillion three months earlier and $0.949 trillion a year earlier.

Moving on to owned loans, the investment portfolio included $242.977 billion in residential mortgages.

Mortgage holdings were reduced from $248.066 billion at the end of the fourth quarter and $256.804 billion at the same point last year.

Another $91.476 billion in home-equity assets were on the books, less than the prior period’s $93.672 billion and down from $103.338 billion owned as of March 31, 2013.

Commercial real estate loans owned by BofA climbed to $48.840 billion from $47.893 billion three months prior and $39.060 billion a year prior.

BofA said it was hit with $1.252 in new representation and warranties claims during the latest period, plummeting from $3.828 billion in the fourth quarter. March ended with $20.264 billion in outstanding repurchase claims.

The consumer real estate services segment had a first-quarter loss of $7.0 billion before taxes, worsening from $1.6 billion in the prior period. The unit had a $3.4 billion loss one year earlier.

Company-wide income prior to income taxes swung to an $0.7 billion loss from a $3.8 billion fourth-quarter profit. Earnings were $2.0 billion in the first-quarter 2013.

“The results for the first quarter of 2014 include $6.0 billion in litigation expense related to the previously announced settlement with the Federal Housing Finance Agency, and additional reserves primarily for previously disclosed legacy mortgage-related matters,” the report said.

The Charlotte, N.C.-based company said it reached a $584 million settlement on April 11 with Financial Guaranty Insurance Co. over second-lien residential mortgage-backed securities.

It also reached nine related settlements with trustee The Bank of New York Mellon on second-lien RMBS, of which seven have completed for $300 million. The other two for $50 million are expected to be completed within 90 days.

The Wall Street Journal reported Wednesday that BofA has been in talks for months with the Department of Justice to settle RMBS investigations. It is a potential multibillion-dollar settlement.

Headcount within consumer real estate services was cut 11 percent compared to the fourth quarter.

Contributing to the reduction in staffing were legacy asset employees, with their numbers falling to 26,200 people from 28,800 at the end of the previous period. The number was 42,600 as of the same date in 2013.

The parent company reported 238,560 full-time equivalent employees across the organization as of the end of last month, fewer than the 242,117 on staff at the end of last year and 262,812 at the same point last year.

Branch count fell to 5,095 from 5,151 at the end of the fourth-quarter 2013.

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