BofA’s Once Giant Mortgage Business Is Now Listed Under ‘Other Income’ (The Quick and The Dead)

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.

Bloomberg has an interesting story entitled “BofA’s Once Giant Mortgage Business Is Now Listed Under ‘Other Income’.”

One measure of how much things have changed in the last decade at Bank of America Corp.: The firm has stopped reporting fees from its mortgage business.

The revenue line that once regularly topped $1 billion a quarter is now so small that the company on Monday lumped it into “all other income” from its consumer bank. The lender simply said income from the mortgage banking business was “lower” in the first quarter.

A Disappearing Business

BofA stopped reporting fees from making and servicing home loans after they got so small


Source: Company filings

After billions in fines and payouts to regulators and investors in the years after the financial crisis, Bank of America has moved away from securitizing and servicing residential mortgages. The firm originated $9.4 billion of new mortgages in the first quarter; in 2009, it topped $100 billion in one quarter. Other financial firms, such as Quicken Loans Inc., are stepping in as traditional lenders pull back.

 Chief Executive Officer Brian Moynihan told analysts Monday that while the fees are no longer important, the business still is. The bank still earns plenty of interest income from home loans as it keeps more of them on its own balance sheet.

But the business of making mortgages to sell them — the specialty of subprime lender Countrywide Financial Corp. that Bank of America bought in 2008 — has largely become a relic. The lender also stopped breaking out gains on the sale of debt securities, and the amount of loans it services is down about 90 percent from 2009.

Mortgage banking income ended its run as a separate line on a sour note: including provisions for payments to investors, the last two quarters of 2017 were negative.

Between the endless litigation against Bank of America (and Countrywide) and Dodd-Frank (and CFPB) regulations, Bank of America’s mortgage originations have plummeted since 2009/2010.


Despite total deposits doubling since 2007.


Mortgage originations as a percentage of servicing is down considerably since 2007.


While neither Bank of America and Deutsche Bank have fully recovered from the Financial Crisis, BofA is doing considerably better. Particularly since 2014.


Yes, Bank of American has joined the ranks of bank lenders that have been “quicken’d” by Rocket Mortgage.

And they are pretty much dead in terms of mortgage lending.


Here is a video of heavily regulated Bank of America competing with relatively unregulated Quicken Loans.

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