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BofA Mortgage Swings to Loss as Originations Drop

Bank of America Corp.’s mortgage business contracted as repurchases and mortgage-servicing rights valuations drove mortgage earnings into the red.

In its third-quarter earnings report, the Charlotte, North Carolina-based financial institution disclosed income at the parent company before income taxes of $7.9 billion.

Although BofA’s earnings weren’t quite as good as $8.4 billion in the prior three-month period, results improved from the $7.3 billion earned one year prior.

Mortgage banking income was a $20 million loss, swinging from a $230 million second-quarter profit. Mortgage income has deteriorated even more significantly compared to $589 million in the same three months last year.

“Mortgage banking income was negatively impacted by less favorable valuations on mortgage servicing rights, net of related hedges, as well as a $0.1 billion increase in representations and warranties provision,” the report said.

Residential loan originations totaled
$17.316 billion during the three months ended Sept. 30. Business dipped from $17.936 billion in the preceding period and fell from $20.406 billion in the third-quarter 2016.

Third-quarter 2017 volume consisted of $13.183 billion in first-mortgage production and $4.133 billion in home-equity loan originations.

For all nine months that have elapsed so far during 2017, mortgage originations amounted to $50.747.

BofA serviced $267 billion in home loans for third parties as of the end of last month.
The servicing portfolio was reduced from $284 billion as of mid-2017 and $336 billion as of Sept. 30, 2017.

The capitalization of mortgage servicing rights was 71 basis points.

On the bank’s balance sheet were $259.198 billion in residential assets. The single-family investment portfolio was trimmed from $259.388 billion at the end of the second quarter but expanded from $256.965 billion as of the same date in 2016. The Sept. 30, 2017, amount was comprised of $199.446 billion in mortgages and $59.752 billion in HELs.

BofA additionally owned $59.628 billion in commercial real estate loans, more than $59.177 billion at the end of the previous quarter and $57.303 billion at the same point last year.

Staffing finished September 2017 at 209,839 employees. Headcount was 210,904 people three months earlier and 211,877 people a year earlier.

BofA cut its branch network by 31 branches, leaving 4,511 financial centers in operation as of Sept. 30.

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