Bank of America (BAC) made little progress on outstanding mortgage repurchase claims during the first quarter.
More than $16 billion in claims are still outstanding, and more than half come from Fannie Mae and Freddie Mac. Between the first quarter of 2011 and the end of last year, total outstanding claims grew from $11.8 billion to $12.6 billion, spiking up 26% in the first three months of 2012.
Investors claim BofA violated origination standards before selling them on the secondary market, and are attempting to force the bank to buy them back. The bank formed its legacy asset division last year to settle the requests. Fannie, the largest mortgage financier in the U.S., and BofA severed business ties in February when the two disagreed over outstanding claims.
“We continue to have disagreements,” said BofA Chief Financial Officer Bruce Thompson in a conference call with investors Thursday.
The result led to fewer claim approvals. According to the earnings statement, BofA approved $480 million in buyback requests during the first quarter, down from $1.1 billion in the previous three months and a high of $2.2 billion in the third quarter.
The bank made slow progress through other repurchase claims as well. Private-label claims still awaiting BofA action more than tripled over the past 12 months, according to bank earnings released Thursday.
Outstanding claims from private mortgage-backed securities totaled $4.8 billion at the end March, up from $1.5 billion the same period last year.
BofA said the increase from private investors came from outside of the $8.5 billion settlement with Bank of New York Mellon (BNY) as a trustee.
That settlement is still pending court approval. BofA also disclosed in its earnings release a claimant filed litigation against BofA including $1.4 billion of private-label repurchase claims. If the BNY settlement is approved, the litigation would be resolved.
The bank expects to lose roughly $5 billion in private-label repurchase claims and said it was still unable to estimate losses on GSE claims.
