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Home | News | Foreclosure | Bank of America Loses $7.3 Billion in Third Quarter
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Bank of America Loses $7.3 Billion in Third Quarter

""Bank of America"":http://www.bankofamerica.com said Tuesday that it lost $7.3 billion, or 77 cents per share, during the three-month period ending in September.
[IMAGE] The company attributed the deficit to new financial reform regulations that place a limit on fee amounts credit card issuers can charge merchants for accepting debit card payments. The new rule resulted in a $10.4 billion ""goodwill impairment"" charge and according to BofA, will continue to diminish its credit card revenues moving forward.

Had it not been for the big hit to its card business, the North Carolina-based financial institution says it would have seen a profit of $3.1 billion, or 27 cents per share, for the third quarter.

BofA did report net income of $3.1 billion during the second quarter of this year. A year ago, in the third quarter of 2009, the company lost $1.0 billion.

On the mortgage side of the business, Bank of America says it benefitted from lower credit costs and a 95 percent increase in mortgage banking income last quarter.

The company extended approximately $11 billion in credit for commercial real estate loans in Q3, $2 billion in home equity products, and $72 billion in first mortgages. BofA says it helped nearly 322,000 people either purchase homes or refinance existing mortgages during the July to September period. Refinances made up nearly two-thirds of third-quarter mortgage lending.

Results outlined in the company's ""third-quarter earnings announcement"":http://mediaroom.bankofamerica.com/phoenix.zhtml?c=234503&p=irol-newsArticle&ID=1484071&highlight indicate that the credit quality picture is improving.

[COLUMN_BREAK]

Loan delinquencies accruing past due 30 days or more declined for the sixth consecutive quarter, as the bank's ratio of nonperforming loans, leases, and foreclosed properties dropped from 3.73 percent at the end of June to 3.71 percent at the end of September, or $34.6 billion.

Bank of America also released $1.8 billion it had previously set aside for expected loan losses. The company earmarked $5.4 billion in Q3 to cover future losses on home loans and other credit products, but that's $2.7 billion lower than its reserve in the second quarter and $6.3 billion lower than the same period a year earlier.

BofA spent $400 million last quarter on loan repurchases from mortgage investors such as Fannie Mae and Freddie Mac who called in warranties because the loans weren't underwritten properly at origination. On a conference call with analysts and investors Tuesday, bank officials said such buyback requests will likely continue to come in for ""the next couple of years.""

Bank executives also assured investors that they don't expect any sizeable losses from delays in foreclosure proceedings due to the company's recent foreclosure suspension.

BofA is one of five servicers who ""halted foreclosures in certain states"":http://www.dsnews.com/articles/bank-of-america-suspends-foreclosures-in-23-states-2010-10-01 to review case files and affidavits after evidence surfaced that internal staff were not following the proper procedure in processing foreclosure actions. Bank of America was the only one to ""extend its moratorium nationwide"":http://www.dsnews.com/articles/bank-of-america-halts-foreclosures-nationwide-2010-10-08 on October 8th.

On Monday, the company said it had begun the process of preparing foreclosure affidavits for ""re-submission to the courts"":http://www.dsnews.com/articles/bank-of-america-and-fidelity-national-reach-agreement-for-reos-2010-10-18 in 102,000 cases in which judgment is pending. BofA will resume foreclosure proceedings on October 25th in 23 judicial states, but will continue to delay foreclosure sales in the remaining 27 states until the company's paperwork reviews are completed on a state-by-state basis.

So far, Bank of America has found no instances in which a homeowner was wrongly foreclosed upon, according to company spokesman Dan Frahm.

""Our decision to review our process and later, to extend our review to all 50 states, has been an important step to give customers confidence they are being treated fairly,"" Frahm said.

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About Author: Carrie Bay

Carrie Bay
Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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