BofA: Jumbo Loans, Federal Loan Mods, and CEO Expects Profitable 2009

""Bank of America"":http://www.bankofamerica.com wants to bulk up its portfolio with more jumbo mortgages, according to Barbara Desoer, the bank's head of mortgage, home equity, and insurance services.
Desoer told _""Bloomberg News"":http://www.bloomberg.com_, ""Bank of America has balance-sheet capacity and we've allocated it to jumbos given our presence in some of the states and regions where that's important.""
Jumbo loans, which can range from $417,000 to $729,750, are still in demand in some high-cost areas, despite the tumble in property values. Desoer says that Bank of America sees an opportunity in these mortgage products with ""mass-affluent"" customers of Merrill Lynch, which the North Carolina-based bank acquired last year.
To accommodate its push to step up mortgage business, Bank of America has added 3,000 employees to its origination unit and more than doubled the number of staff responsible for dealing with troubled borrowers.
Desoer also told _Bloomberg _that the bank's 2008 purchase of Countrywide Financial is ""paying off"" with additional loan capacity. Desoer said in the interview that her bank plans to shift its reworking of Countrywide loans to the new federal protocols, although it hasn’t yet reached an agreement to do so.
To settle allegations of fraudulent and predatory lending at Countrywide, Bank of America reached agreements with more than 30 state attorneys general to modify the loans in question. However, those Countrywide modifications are now the center of a lawsuit brought by a hedge fund that claims Bank of America is paying for the settlement with funds that are owed to mortgage-bond investors. Desoer assured _Bloomberg _that BofA isn’t changing any mortgages where investors haven’t agreed to permit the modifications, and said she hopes bondholder objections to the recently announced federal loan mod program don’t impair its progress.
In a ""speech in Boston"":http://newsroom.bankofamerica.com/index.phpxs=speeches&item=219 on Thursday, Bank of America's CEO, Kenneth Lewis, said he expected the company to earn ""close to $50 billion"" this year, before taxes and new provisions for loan losses.
Lewis said, ""That kind of cash flow can solve a lot of problems, given time and an improving U.S. economy.""
Bank of America's stock is up 86 percent this week, following Lewis' optimistic outlook. Lewis also said that he didn't believe his bank would need any more federal funding to bolster its balance sheet. So far, Bank of America has received capital and guarantees from the federal rescue program valued at $163 billion.
Lewis said Thursday, ""While some banks may need more public support in the future, I don't believe we will."" Still, he added, ""it's possible that the government could compel us to take more capital pending the results of their stress test. But I'm confident we'll pass the stress test.""