B of A seeks $3 billion to counter foreclosure penalties

Bank of America had to pay $1.3 billion in penalties to Fannie Mae and Freddie Mac in the first nine months of 2011 because of the delays in foreclosure cases, the bank disclosed in a Securities and Exchange Commission filing.

According to RealtyTrac, more than 8.9 million homes have been lost to foreclosure since 2007. Lender Processing Services revealed that foreclosures completed in September spent an average 619 days delinquent.

“We expect that these costs will remain elevated as additional loans are delayed in the foreclosure process and as the GSEs assert more aggressive criteria,” according to the filing. “We also expect that additional costs related to resources necessary to perform the foreclosure process assessment, to revise affidavit filings and to implement other operational changes will continue for at least the remainder of 2011.”

GSEs are government sponsored enterprises created by the government. Fannie Mae and Freddie Mac are GSEs.

B of A is already searching for new capital. Also in the SEC filing, B of A disclosed it was exploring an issuance of commons stock to raise nearly $3 billion in cash.