Bank of America says housing has 'begun to turn'
NEW YORK (AP) — For banks, mortgage-making kept profits humming before the financial crisis, then blackened reputations and stamped out earnings when the crisis hit.
Now, the business of mortgage lending is more of a mixed bag.
Bank of America, the country's second-biggest bank, reported Wednesday that mortgage originations jumped over a year ago — up 18 percent to $21 billion. But the mortgage unit still lost money as the bank worked through problem mortgages issued before the crisis.
It's the latest sign that five years after the housing bubble burst, mortgages remain thorny for the banking industry. They still drive revenue, but banks are getting hit with expensive reminders of the risky mortgage lending of last decade, in the form of lawsuits, foreclosures and regulatory headaches.
Bank of America's chief financial officer said Wednesday he thought the housing market had turned, noting that home prices are rising more consistently. His statements echoed what JPMorgan Chase and Wells Fargo, the country's two largest mortgage lenders, suggested last week.
"I think we've clearly begun to turn the corner," Bruce Thompson said in a conference call with reporters to discuss the bank's third-quarter earnings, which beat Wall Street expectations.
Still, Thompson noted that any recovery is tenuous. He said he'd remain "a little bit cautious because there are headwinds out there."
"'It's obviously early in the cycle with home prices moving up," Thompson said. "There are obviously certain questions that remain in the economy with respect to other matters."
On Monday, Citigroup executives showed wariness when asked about the housing market. Citi's chief financial officer wondered whether the U.S. is creating enough jobs to support a sustained recovery.
Bank of America is the last of the mortgage-heavy mega-banks to report third-quarter earnings.
Mortgage originations soared at Wells Fargo, rose respectably at JPMorgan and Bank of America, and fell at Citigroup.
Refinancing made up the bulk of the banks' mortgage growth this quarter — at Bank of America, it accounted for 83 percent. That saves homeowners money and makes money in fees for the banks. But refinancing does less to drive the housing market recovery than a sale.
The banks' mortgage units also continue to draw lawsuits. Last month, Bank of America announced it would forgive the second-lien mortgages of certain struggling homeowners. It made the pledge as part of a settlement between federal and state governments and the big banks in March.
Business Photo Galleriesview all
- 20726Oklahoma medical examiner reports cause of deaths in Grand Lake boat crash
- 16618Oklahoma City Thunder: Amnesty Kendrick Perkins?
- 11933Rockets guard Patrick Beverley bombarded with hateful Tweets after Thunder get eliminated
- 11447Oklahoma State football: Todd Monken thinks Wes Lunt should've stayed in Stillwater
- 10097Oklahoma football: Sooners get pair of commitments
- 9885OKC Thunder: Thunder trio praise fans before potential departures
- 9809Report: OSU blocking Wes Lunt from transferring to the SEC, Big 12 and Southern Miss