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Mortgage

Which bank paid the most for past mortgage sins?

TBTFs spend a fortune defending themselves

So far, so not-so-good. Many of the too-big-to-fails reported fourth quarter results by now… and all are setting aside money to pay for legal expenses accrued from bad mortgage bets during the subprime debacle, and other bad investment decisions.

It really tore into the bottom line, some banks more than others.

So, taken together, which banks are suffering the most?

Bank of America (BAC) posted a record net income of $3.4 billion for the fourth quarter of 2013, and it was the dubious winner of paying the highest mortgage-related litigation expenses of any of the major banks HousingWire follows.

BA saw higher litigation expense reflecting the continued evaluation of legacy exposures largely related to residential mortgage-backed securities litigation.

Litigation expenses for the banking giant rose to $2.3 billion in the fourth quarter of 2013 from $1.1 billion in the third quarter of 2013 and $916 million in the fourth quarter of 2012, showing an increasing urgency to put these cases behind them.

Morgan Stanley (MS), took the next biggest hit in the mortgage-related litigation cost sweepstakes.

Their fourth-quarter results include $1.2 billion of "additions to legal reserves for mortgage-related matters, specifically litigation and investigations related to residential mortgage-backed securities and the credit crisis."

In third place, JP Morgan (JPM) set aside $1.1 billion in legal expenses, plenty of which concerned its involvement with the Bernard Madoff Ponzi scheme settlement.

Goldman Sachs (GS) is in fourth place, where most of the $561 million the firm set aside for litigation involved mortgage operations.

Goldman says that provisions for litigation and regulatory proceedings for the fourth quarter of 2013 were $561 million, up 155% from $260 million for the fourth quarter of 2012.

Wells Fargo (WFC) seemed to be poised to put the most of the troubles behind them. Wells Fargo posted record earnings once again. Wells Fargo’s strong earnings results come shortly after the lender’s agreement with Fannie Mae on Dec. 30, 2013, which was fully covered through previously established mortgage repurchase accruals, that resolved substantially all repurchase liabilities related to loans sold to Fannie Mae that were originated prior to Jan. 1, 2009.

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