Bank of America’s second quarter profits were marred from the record number of mortgage claims asking for refunds due to faulty mortgages. The bank, based in North Carolina, is the second largest in assets in the United States.
It results cast further doubt on whether the real estate lender can maintain the improvements it has made in its real estate sector. By lowering the amount it holds in reserve, the bank was able to walk away with a profit for the second quarter of $2.45 billion. That was compared to a record loss for the same quarter one year ago of more than $8.8 billion.
One positive sign was the bank announced fewer of its home borrowers are paying late in the most recent quarter. Nevertheless, the bank said the demands to received buybacks from investors of mortgage bonds and insurers have skyrocketed during the second quarter to reach more than $22.7 billion.
During a conference call, top managers, including CEO Brian Moynihan were questioned by analysts. The analysts wanted to find out more about the buyback demands and why there continues to be increases in claims for loans dating back as far as six years. Moynihan said the bank has already set aside more than $40 billion to resolve disputes moving forward on those loans and foreclosures.
In late afternoon trading on Wednesday the bank stock was down by about 3%, but thus far in 2012, the bank leads the 30-Dow stocks with an increase overall of 37%.