Bank Of America To Take $20 Billion Mortgage Hit In 2nd Quarter

Financials remains depressed despite the run-up in the Dow over the past five months. Bank stocks remain depressed. Bank of America trades at around $10 a share. Much of Bank of America’s problem is with its mortgage division.

Dow Jones reports: Bank of America Corp.’s (BAC) will take a massive blow of more than $20 billion in the second-quarter for various mortgage-related costs, including $14 billion the bank will put aside to repurchase soured mortgage loans from investors.

The costs show the continuing impact on the nation’s biggest bank from the housing crisis and its purchase of home-lender Countrywide Financial.

The bank will pay $8.5 billion to settle claims brought by a group of high-profile investors, including BlackRock Inc. (BLK), MetLife Inc. (MET) and Pacific Investment Management Co., or Pimco, who purchased mortgage-backed securities that subsequently went sour. Separately, the bank said it was taking a further $5.5 billion second-quarter provision tied to its exposure to government-run mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC) as well as other private investors.

The bank also expects to record $6.4 billion in other mortgage-related charges in the period, including $2.6 billion to write off the balance of goodwill in the consumer real-estate services business and roughly $4 billion that includes litigation costs and other writedowns related to servicing and foreclosure costs.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
This entry was posted in Banks, mortgage and tagged , , , , , . Bookmark the permalink.