Bank of America continued to bleed red ink from its residential finance business with the unit reporting a net loss of $877 million in the third quarter, compared to a loss of $1.1 billion in the same period a year ago.
But there was some good news in the division. Its home loan business was profitable in 3Q on an operating basis but was dragged down by what the bank calls “the continued high costs of managing delinquent and defaulted loans” in its servicing portfolio. (Residential finance is housed under "Consumer Real Estate Services" at B of A.)
According to reporting by National Mortgage News, B of A continues to be a net seller of mortgage servicing rights and
Its provision for representations and warranties (tied to mortgage buybacks) came to $307 million in the third quarter compared to $395 million in 2Q. In the year ago quarter it took a rep and warrant charge of $278 million.
Meanwhile, the megabank originated $21.2 billion of first and second liens in 3Q, a 12% improvement from the prior quarter, but a 36% plunge from the same period a year earlier. (It officially exited the correspondent channel earlier this year and has whittled down its warehouse business significantly.)
The bank had $24.5 billion of nonperforming loans, leases and foreclosed properties on its books at Sept. 30, compared to $29 billion a year ago.
“The provision for credit losses in the third quarter of 2012 decreased $654 million from the year-ago quarter to $264 million, driven by improved portfolio trends in the non-purchased credit-impaired portfolio and reserve reductions in the PCI home equity portfolio partially offset by the impact of new regulatory guidance for loans discharged in bankruptcies,” the bank said in its earnings statement.
The entire bank earned $340 million in 3Q compared to $6.2 billion in the same period a year earlier.
