Bank of America lost $1.5 billion on its residential mortgage business in the second quarter with credit charges remaining high and loan production barely rising from the first quarter.
Overall, revenue from its home loans and insurance division fell to $2.8 billion, a 23% decline from the first quarter. Comparisons to the same period last year looked even worse with revenue falling by 37%. In 2Q09 it lost $726 million on its mortgage banking and insurance business.
In a statement B of A, the nation's largest home mortgage servicer with $2.1 trillion in receivables (21.83% of the market), said net income in the unit "was driven by the $802 million increase in representations and warranties expense, combined with lower production volume and margins resulting from a decrease in refinance activity. Also contributing to the decline were less favorable mortgage servicing results partially offset by increased servicing income."
Although B of A is continuing to struggle with its mortgage unit, there was some good news: its provision for credit losses fell to $2.4 billion, down 36% from 1Q.
Bank of America Home Loans, which funds mortgage production through retail, wholesale, and correspondent means, originated $72 billion of first mortgages during the period, essentially flat from the previous quarter. Roughly 53% of its fundings were for purchases with refis accounting for the balance.
The entire bank, including its overseas operations, earned $3.1 billion in the quarter, compared to $3.2 billion in 2Q09.
