B of A Cuts Legacy Delinquency Mortgage Portfolio in Half

Bank of Americas effort to reduce the size of its legacy servicing portfolio via servicing sales and workouts has reduced its quarterly expenses by $1 billion per quarter, according to B of A chief executive Brian Moynihan.

There has been a dramatic reduction in 60-day delinquencies which has allowed us to bring down the costs, Moynihan said during a presentation at a Goldman Sachs financial services conference Tuesday.

He pointed out that the number of delinquent mortgages dropped to less than 400,000 as of Sept. 30, down from 900,000 a year ago.

It took 58,000 employees to service those loans in the summer of 2012. Now B of As legacy asset servicing unit has just 27,600 employees. And legacy asset servicing expenses have been reduced by nearly $1 billion from 4Q 2012 to $2.2 billion in the recent third quarter.

That reduction in expenses will be a significant difference for us in 2014, Moynihan said.

The CEO is also looking forward to working through all remaining legacy representation and warranty claims and other litigation facing B of A in 2014.

Bank of America has already paid $43 billion in reaching settlements and agreements with Fannie Mae, Freddie Mac, federal regulators and others.

The Charlotte, N.C.-based bank estimates that remaining RW claims could cost up to $4 billion and other litigation could cost another $5 billion. B of A currently has $14 billion in reserves to cover those losses.

Article source: http://www.nationalmortgagenews.com/dailybriefing/B-of-A-Cuts-Legacy-Delinquency-Mortgage-Portfolio-in-Half-1040215-1.html

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