Wells Fargo & Company (NYSE:WFC) controls 30 percent of the market, and JPMorgan Chase & Co. (NYSE:JPM) , 10 percent. Bank of America points out that those two rivals still get a large part of their mortgage revenue from buying mortgages from third-party lenders.
Despite the strides the bank has made, reminders of Bank of America’s lingering mortgage mess were hard to miss in its fourth-quarter financial results.
Earnings and revenue slipped as the bank took big charges on two mortgage-related settlements. Earlier this month, Bank of America Corp (NYSE:BAC) and other banks agreed to pay a combined $8.5 billion to settle government accusations that they had wrongfully foreclosed on struggling homeowners. It also settled disputes with Fannie Mae, the government-backed mortgage agency, which forced Bank of America to buy back some of the mortgages it had sold Fannie before the financial crisis.
Other mortgage fights, including repurchase demands from private investors, could hammer future financial results.
The bank took a charge of $2.7 billion because of the Fannie Mae settlement and a $1.1 billion charge for the foreclosure settlement, among other charges.
That sent earnings down sharply, a result that Bank of America Corp (NYSE:BAC) had already warned about. The bank made $367 million in the last three months of 2012 after paying preferred dividends, down sharply from $1.6 billion in the same period a year ago. Those earnings amounted to 3 cents per share. Bank of America’s stock fell 45 cents to $11.33 in afternoon trading.
Revenue was also dragged down by the Fannie Mae settlement. Revenue dropped to $19.6 billion after stripping out an accounting charge, down from $26.4 billion in the same period a year ago.
The bank has been cutting jobs and other expenses. The number of employees fell to 267,190, down about 14,600 jobs since a year ago.
Analysts called it another quarter of earnings sacrificed to working through the mortgage problems. “Making expensive progress” is how Nomura analyst Glenn Schorr characterized the quarter.
The article Lessons Learned, Bank of America Makes a New Mortgage Push originally appeared on Fool.com.
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