Year-over-year, Bank of America posted an 18 percent increase in mortgage originations to $21 billion, the AP reported. However, the bank’s mortgage unit still lost money by working through mortgages issued before the onset of the housing crisis.
Refinancing accounted for the bulk of mortgage growth in the third quarter — 83 percent for the bank. As The Real Deal reported today, mortgage applications in general decreased 4.2 percent during the week of Oct. 12.
Even five years after the housing crisis began, mortgages are still troublesome for the banking industry, as banks get slammed with pricey reminders of risky mortgage lending with foreclosures and lawsuits.
All in all, the bank posted a profit of $340 million in the third quarter — less than a penny per share, but better than the 11-cent Loss Wall Street had expected. But with this figure came a $1.6 billion charge for legal expenses after settling a shareholder lawsuit, which alleged the bank misled investors about its 2008 decision to acquire Merrill Lynch, the third quarter results are skewed, the AP said. Also, a near $2 billion charge from an accounting rule on how banks value debt hurt Bank of America.
Expressing caution and some ambiguity over whether the housing market has turned “I don’t think we’ve clearly begun to turn the corner,” Bank of America CFO Bruce Thompson told the AP. [AP via Crain’s]