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Repurchase Claims Tumble at BofA

Mortgage originations improved at Bank of America Corp., though — with more than nine-out-of-10 new loans being refinances — production is poised to plummet when rates rise. The size of the mortgage servicing portfolio has been reduced by $500 billion over the past year. BofA saw a huge reduction in new repurchase demands.

Earnings data released Wednesday indicate that home-loan originations during the first three months of this year totaled $25.036 billion. That worked out to around 106,000 new loans.

Business was better than during the fourth-quarter 2012, when BofA loan originators generated $22.478 billion in mortgage production.

An even more stark improvement was made from the first-quarter 2012, when originations amounted to $15.998 billion.

The latest activity included $23.920 billion in first mortgage production and $1.116 billion in home-equity loan fundings.

First-quarter refinance share on first mortgages was 91 percent — far greater than the 69 percent industry-wide refinance share reported in last week’s Mortgage Market Index. Industry estimates had first-quarter refinance share around three-quarters.

The bank reduced its mortgage servicing portfolio to $1.1850 trillion from $1.3318 trillion at the end of last year. The servicing portfolio has been slashed from $1.6864 trillion as of March 31, 2012.

Mortgages serviced for investors accounted for $0.949 trillion of the latest total, down from $1.045 trillion at the end of 2012.

U.S. residential mortgage assets, including discontinued loans, were $256.838 billion at the end of last month. Mortgage holdings grew from $252.980 billion as of the end of last year and $266.797 billion as of March 31, 2012.

An additional $103.218 billion in home-equity loans were owned as of last month, less than the $107.996 billion in HEL holdings three months earlier and $121.246 billion on the books a year earlier.

Commercial real estate loans secured by U.S. properties finished March at $37.6 billion, up slightly from $37.2 billion in the prior period and $36.3 billion in the same quarter during the prior year.

BofA suffered $881 million in litigation expense during the most-recent period. A $500 million class action settlement for $500 million in the Luther, Maine State, and Western Teamsters action over residential mortgage-backed securities issued by Countrywide Financial Corp. subsidiaries was included in the total.

BofA said that new repurchase claims plummeted to $1.8 billion from $4.5 billion at the end of the previous period and $4.7 billion 12 months prior.

Outstanding repurchase claims finished March at $17.1 billion, sinking from $28.3 billion the prior quarter as a result of a $12.4 billion drop in outstanding claims from Fannie Mae and Freddie Mac. BofA reached a $10.3 billion settlement in January with Fannie over repurchases.

The provision for representations and warranties was $250 million in the first quarter.

Income before taxes within the real estate services business was a $2.1 billion loss. BofA cut its losses from $5.6 billion in the fourth-quarter 2012 but worsened from the $1.7 billion loss in the first-quarter 2012.

Consolidated net income before income taxes swung to a $3.6 billion profit from a $1.9 billion loss in the fourth quarter. Income was $0.7 billion during the same period in 2012.

As of March 31, BofA employed 3,607 mortgage loan officers, increasing its origination staffing from 3,519 as of Dec. 31, 2012. A year prior, loan originators numbered 2,795. Last month’s total included 1,807 banking center originators and 1,800 centralized and field originators.

Within its legacy assets and servicing unit, headcount fell to around 42,900 from 49,600 in the prior quarter. The year-earlier total was 56,500. Included in the first-quarter 2013 number were 35,500 full-time employees in addition to 7,400 contractors and off-shore support staff.

Company-wide staffing at the Charlotte, N.C.-based company fell to 262,812 employees from 267,190 at the end of last year. At the same point last year, headcount was 278,688.

As of March 31, there were 5,389 BofA branches in operation, fewer than 5,478 three months earlier.

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