Bank of America originated just $16 billion of first and second liens in the first quarter, a 72% decline from the same period a year ago as the closing of its correspondent channel weighed heavily.
Compared to 4Q11, residential fundings declined by 27%. Late last year the bank began to exit the correspondent business, and today originates mortgages through just one channel: retail.
BofA’s consumer real estate division, which includes both mortgage banking and legacy assets, posted a $1.14 billion loss in 1Q12, after suffering $1.26 billion in charges tied to delinquent loans.
During a conference call with analysts and reporters, the bank said it continues to have buy back problems with Fannie Mae over representations and warranties, particularly on loans that went bad after 24 months. (The bank is no longer doing business with Fannie Mae except on certain Home Affordable Refinance Program or HARP loans.)
It also moved $1.9 billion of performing home equity loans to nonperforming status, after a regulatory change installed last year.
Although BofA lost money on consumer real estate business, its residential mortgage division (as a stand-alone operation) posted a $1.6 billion profit in the quarter, down 24% from Q4. A year ago mortgage banking earned just over $600 million for the company.
The bank has been a net seller of mortgage servicing rights for several quarters, but actually marked up the asset value of its MSRs to $7.6 billion at March 31, from $7.4 billion in 4Q11. It cited rising interest rates in 1Q12.
At the end of March the bank held $15 billion of nonperforming mortgages compared to $16 billion at year end. A year ago its NPLs totaled $17.4 billion.