Mortgage woes continue to plague Bank of America

By PALLAVI GOGOI
AP Business Writer

NEW YORK (AP) – Bank of America Corp. is still trying to shake off troubles arising from mortgages written during the housing bubble.

Higher fees from battling lawsuits and costs related to its mortgage business led to a 39 percent decline in BofA’s first-quarter earnings, the bank announced. It wasn’t what investors wanted to hear, since just three months ago the bank announced several big charges and settlements that seemed to resolve many of its mortgage problems.

“It seems like some of the mortgage-related issues that they said were behind them are actually not behind them yet,” said Paul Miller, a bank analyst at FBR Capital Markets.

The bank is fighting lawsuits from investors and insurers who say that during the housing bubble they were duped into buying loans that were based on fraudulent documents. Bank of America set aside $1 billion to repurchase those mortgages and also added $352 million to its legal expenses in the first quarter. The bank had already taken a $4.1 billion expense in the previous quarter for mortgage repurchase claims and $1.5 billion for litigation expenses.

“The numbers are getting worse and nobody seems to have a handle on how bad this could be,” said Miller.