Bank of America Set to Lose Another $27 Billion in Housing
June 14th, 2011
Bank of America has already suffered the loss of about $46 billion since the start of the housing crisis, and it’s not nearly done losing according to analysts in the market. In fact, BofA could lose another $27 billion from the second quarter of 2011 through 2013, said Sanford C. Bernstein analyst John McDonald[1]. That number includes losses on loans, mortgage buybacks and regulatory and legal expenses. “Legacy mortgage issues will be long and arduous,” added McDonald, referring to BofA’s much-maligned purchase of Countrywide Financial Corp in 2008.
Despite these grim numbers, however, BofA is expected to remain profitable over the next seven quarters, predicted CreditSights, another analytics firm. Other investors and analysts predict that earnings will be lower – one analyst recently cut 2011 earnings estimates for the bank in half thanks to his expectations that the lender will settle with private investors over toxic mortgages – but most predict that earnings – and profits – will continue[2].
On one hand, it seems like the news keeps getting worse for Bank of America, but on the other, they just keep plugging along and making money. Do you think that this lender will last?
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[1] http://www.charlotteobserver.com/2011/06/13/2376885/analyst-bofa-could-lose-another.html
[2] http://www.baltimoresun.com/business/sns-rt-us-bankofamerica-catre75c5n5-20110613,0,5624587.story
June 14th, 2011 at 7:27 AM
As long as the government keeps throwing 0% money at the banks, and they use the money to support credit card loans, auto loans, and other high interest loans, without using the money to support mortgage lending, they will remain profitable. Why worry about housing? The banks made obscene amounts of money pushing sub-prime loans until the bubble burst. Now they use the money from high interest investments to keep the balance sheets “clean” while the housing market goes down the crapper. Life is good if you are a banking executive!!!
Jim Myers
June 14th, 2011 at 9:59 AM
I am real estate broker. I had listing seller did deed in lieu few days later I presented contract 249000 bank refused to deal w/me (broker) i met them to do termite letter & appraisal however they turned over to another realtor for $215000. I had loan approved & closing in 30 days guarantee. why did the bank refuse $35000. Who is paying the bank more money to turn down a deal like this? I have all the records to prove this.