Bank of America said its mortgage banking income jumped 95% in the third quarter to $1.75 billion, as production margins widened and expenses on representations and warranties declined.
B of A originated $72 billion in 3Q, flat compared to the second quarter. Bank officials are forecasting roughly $72 billion in loan production for the fourth quarter.
"Origination volumes have been strong," said B of A president and chief executive Brian Moynihan.
According to figures compiled by National Mortgage News, B of A is the nation's second largest residential funder but ranks first among servicers. A few weeks ago it announced that it would close its wholesale division.
During the bank's third quarter conference call, Moynihan noted that delinquencies and charge-offs in the mortgage area have stabilized. The CEO expects foreclosures to peak in the next three to four quarters, but remain elevated for some time.
Wednesday afternoon the bank said it would move ahead with foreclosures in 23 states where it had temporarily suspended such actions. "We have to get on with it because it will restore the health of the market," Moynihan said.
In 3Q the megabank booked a $872 million 'rep and warranty' charge, a $376 million decline from 2Q. However, outstanding R&W claims from the GSEs and private mortgage insurers continue to pose a problem.
B of A has received $4.8 billion in claims from PMI companies and so far it has declined to repurchase $2.7 billion of those loans.
"We are protecting the shareholders' money. We will make sure we pay when due -- not just do a settlement to move the matter behind us," the CEO said.
Although the bank's mortgage business had a good quarter, overall it lost $7.65 billion due to a charge related to credit and debit card reform legislation passed over the summer.
B of A said it took a $10.4 billion charge because the legislation limits fees banks can collect when merchants accept debit cards. B of A said that change would reduce future revenues in its card business.
Excluding the one-time charge, Bank of America earned $3.1 billion.
