BoA Loses $1.6B on Home Loans, Citing CFC Portfolio

Bank of America's home loans and insurance division lost $1.6 billion in the third quarter — compared to a slight loss last year — citing weakening home prices and "further deterioration" in the mortgage portfolio it inherited when it bought Countrywide Financial Corp. in July 2008. Most of the CFC portfolio acquired includes payment-option ARMs, subprime mortgages and HELOCs. Overall, the company lost $1 billion in the quarter compared to earnings of $1.2 billion in the third quarter of 2008. The home loans and insurance division had credit losses of $2.9 billion during the period. (Companywide, BoA had $11.7 billion in credit losses, $1.7 billion lower than the second quarter and $5.3 billion higher than the same period last year.) In the mortgage group, the firm's noninterest expense rose to $3 billion "mostly due to increased compensation costs and other expenses related to higher production volume and higher delinquencies," it said. The bank's residential division funded $95.7 billion in first mortgages. In the second quarter it originated $114 billion in residential loans, but some of that figure includes second liens. No HELOC figure was immediately available for the third quarter.