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Muhammad Bazil
Muhammad Bazil
Articles (192) 

Bank of America: Bright Light at the End of the Tunnel

September 27, 2012 | About:

In today’s tough market, both buyers and investors should breathe a sigh of relief that interest rates are down on mortgages. U.S. homeowners looking to purchase real estate can take advantage of some record low rates on houses if they qualify. The Bank of America (NYSE:BAC) would have been on the road to recovery had they only avoided the Countrywide purchase.

Recently Bank of America has been able to show better than expected profits earning $2.5 billion or 19 cents a share, above analysts’ expectations of 14 cents a share. The housing market has still proved problematic for the bank as investors are calling on it to repurchase more risky soured mortgages. The potential cost of something like this is hard to estimate, coming in around $22.7 billion in the previous quarter, up from $16.1 billion.

As the bank looks to expand earnings and grow it has also managed to save money as mortgage related fees are down. This is of course related to the bank’s purchase of Countrywide Financial which was the nation’s largest sub-prime mortgage lender. Bank of America reiterates that existing bad loans are the result of a poor economy, and not the bank’s ability to underwrite or process loans. This contrasts with shareholder views that the bank should purchase soured mortgages. The bank did not have to pay the record $8.8 billion in mortgage fees it paid last year during this time period. It has outlined that mortgages 60 days late have declined significantly.

Wells Fargo (NYSE:WFC), one of the beneficiaries of increased mortgages at lower rates, has seen profits increase as a result of a stronger concentration of loans being handled by only large banks. Wells Fargo reported $4.8 billion in revenue in the first six months of this year, a 155 percent increase from the same period last year. Wells Fargo has managed to make 31 percent of the loans to lenders.

Mortgage backed securities have been the source of much profit for banks that seek to extend profits. They are sold to investors as a way of adding extra gains along with slightly higher lending rates.

You are most likely wondering how a bank could make this effective giving the current economy. The reason is because while Bank of America or Chase Corporation (CCF) are the originator of the loans, they are actually transferred to Fanny Mae or Freddy Mac, the government-controlled mortgage giants that offer a government guarantee on payments. This allows for Bank of America or another large bank to sell bonds to investors that are both attractive and high paying.

There is an industry term for defining the profit between the lending rate and the bond rate, simply called the spread. By offering a mortgage at 3.6 percent and selling a bond at 2.6 percent that bank has been able to secure capital for the mortgage and profit once the bond is sold.

According to analysts who track the market, that spread is now at a record high, allowing essentially all banks in the mortgage industry to recover larger profits. The technique I just explained has been in practice for some time, but the increase has been tremendous. Previously the spread was around .5 percent from 2000 to 2010, but lately has jumped to 1.1 percent in the first six months of the year, and this month to 1.26 percent.

The move has allowed for profits to increase at banks, but potentially this could draw the ire of bank regulators. The reasoning is that the federal government in the U.S. currently purchases bank bonds in an effort to relieve toxic mortgages from bank hands. Some regulators may view the practice as dishonest considering the bonds have been purchased in mass to lower rates for consumers and improve the American economy.

Still with America in a constant election cycle and plans for their fiscal and regulatory policies in question, the safe answer for today is that these concerns are currently not an issue.

About the author:

Muhammad Bazil
Muhammad Bazil is a financial journalist and editor for a variety of websites, public policy organizations, and book publishers. He has written hundreds of published articles and blog posts on topics including budgeting, credit management, real estate and investing. His articles have been featured on the homepage of Yahoo!, MSN and numerous local news websites.

Rating: 3.2/5 (16 votes)


Mark_p93561 - 5 years ago    Report SPAM
Heres your bright light. _This is what the cyberattacks are about, God plus Jesus plus solar flares protecting His Children. Everyone wants to blame others or take credit for what God is doing to banks greed, exploitation of peoples wages and affliction against His Children. This is what's up. God and Jesus added to the Sun's energy, substance, power and light which is added to our atmosphere, light, air, water, earth and beings, to perform His will and judgement. Solar Flares, CME’s and sunlight, sun’s energy, radiation and substance added to Water, air, and food with God, His word, His Son, His Son's Blood and Holy spirit, truth, purity and righteousness, is coming for Bank of America and all that exists in the universe, Earth , All heavens and beyond, Past present and future, Eternally and NO-ONE can remove Him from there in the name of Jesus Christ, Amen! Solar Flares and CME's Plus God, Jesus and the Holy Spirit in the Light and energy of the Sun is upon the wage earner exploiters of Bank Of America and other banks as the Lord being a swift witness against them and those who support them, as well as All others for a blessing or curse, to each his own reward for what they have done to others and continue doing so without repentance when asked to.

Matthew 3:11I indeed baptize you with water unto repentance, but He who is coming after me is mightier than I, whose sandals I am not worthy to carry. He will baptize you with the Holy Spirit and fire.

The Reign and Indignation of God

Isaiah 66:14 When you see this, your heart shall rejoice, And your bones shall flourish like grass; The hand of the Lord shall be known to His servants, And His indignation to His enemies 15 For behold, the Lord will come with fire And with His chariots, like a whirlwind, To render His anger with fury, And His rebuke with flames of fire.16 For by fire and by His sword The Lord will judge all flesh; And the slain of the Lord shall be many.17 “Those who sanctify themselves and purify themselves, To go to the gardensAfter an idol in the midst, Eating swine’s flesh and the abomination and the mouse,Shall be consumed together,” says the Lord.

Psalm 21:9You shall make them as a fiery oven in the time of Your anger; The LORD shall swallow them up in His wrath, And the fire shall devour them.

Psalm 89:46How long, LORD? Will You hide Yourself forever? Will Your wrath burn like fire?

Isaiah 9:19Through the wrath of the LORD of hosts The land is burned up, And the people shall be as fuel for the fire; No man shall spare his brother.

Ezekiel 21:31I will pour out My indignation on you; I will blow against you with the fire of My wrath, And deliver you into the hands of brutal men who are skillful to destroy.

Ezekiel 22:21Yes, I will gather you and blow on you with the fire of My wrath, and you shall be melted in its midst.

Ezekiel 22:31Therefore I have poured out My indignation on them; I have consumed them with the fire of My wrath; and I have recompensed their deeds on their own heads,” says the Lord GOD.

Ezekiel 38:19For in My jealousy and in the fire of My wrath I have spoken: ‘Surely in that day there shall be a great earthquake in theland ofIsrael,

Malachi 3

The Coming Messenger

1 “Behold, I send My messenger, And he will prepare the way before Me.

And the Lord, whom you seek, Will suddenly come to His temple, Even the Messenger of the covenant, In whom you delight. Behold, He is coming,”Says the Lord of hosts.

2 “But who can endure the day of His coming? And who can stand when He appears?For He is like a refiner’s fire And like launderers’ soap.

3 He will sit as a refiner and a purifier of silver; He will purify the sons of Levi, And purge them as gold and silver, That they may offer to the Lord An offering in righteousness.

4 “Then the offering of Judah and Jerusalem Will be pleasant to the Lord, As in the days of old, As in former years.

5 And I will come near you for judgment; I will be a swift witness Against sorcerers, Against adulterers, Against perjurers, Against those who exploit wage earners and widows and orphans, And against those who turn away an alien— Because they do not fear Me,” Says the Lord of hosts.

6 “For I am the Lord, I do not change; Therefore you are not consumed, O sons of Jacob.

7 Yet from the days of your fathers You have gone away from My ordinances And have not kept them. Return to Me, and I will return to you,” Says the Lord of hosts. “But you said, ‘In what way shall we return?’

Do Not Rob God8 “Will a man rob God? Yet you have robbed Me! But you say, ‘In what way have we robbed You?’ In tithes and offerings.

9 You are cursed with a curse, For you have robbed Me, Even this whole nation.

10 Bring all the tithes into the storehouse, That there may be food in My house, And try Me now in this,” Says the Lord of hosts, “If I will not open for you the windows of heaven And pour out for you such blessing That there will not be room enough to receive it.

11 “And I will rebuke the devourer for your sakes, So that he will not destroy the fruit of your ground, Nor shall the vine fail to bear fruit for you in the field,” Says the Lord of hosts;

12 “And all nations will call you blessed, For you will be a delightful land,” Says the Lord of hosts.

The People Complain Harshly

13 “Your words have been harsh against Me,” Says the Lord, “Yet you say, ‘What have we spoken against You?’

14 You have said, ‘It is useless to serve God; What profit is it that we have kept His ordinance, And that we have walked as mourners Before the Lord of hosts?

15 So now we call the proud blessed, For those who do wickedness are raised up;

They even tempt God and go free.’”

A Book of Remembrance

16 Then those who feared the Lord spoke to one another, And the Lord listened and heard them; So a book of remembrance was written before Him For those who fear the Lord And who meditate on His name.

17 “They shall be Mine,” says the Lord of hosts, “On the day that I make them My jewels. And I will spare them As a man spares his own son who serves him.”

18 Then you shall again discern Between the righteous and the wicked, Between one who serves God And one who does not serve Him.

Malachi 4

The Great Day of God

1 “For behold, the day is coming, Burning like an oven, And all the proud, yes, all who do wickedly will be stubble. And the day which is coming shall burn them up,” Says the Lord of hosts, “That will leave them neither root nor branch.

2 But to you who fear My name The Sun of Righteousness shall arise With healing in His wings; And you shall go out And grow fat like stall-fed calves.

3 You shall trample the wicked, For they shall be ashes under the soles of your feet On the day that I do this,” Says the Lord of hosts.

4 “Remember the Law of Moses, My servant, Which I commanded him in Horeb for allIsrael, With the statutes and judgments.

5 Behold, I will send you Elijah the prophet Before the coming of the great and dreadful day of the Lord.

6 And he will turn The hearts of the fathers to the children, And the hearts of the children to their fathers, Lest I come and strike the earth with a curse.”

Mark_p93561 - 5 years ago    Report SPAM
1. Why did Countrywide change my 5.75% mortgage loan, I Locked-in at, to 6.25% right before signing escrow, without discussing it with me 72 hours prior as loan documents states must be done?

2. Why did Countrywide tell me I couldn’t afford the cheaper loan and that they thought they told us prior already, when I called during signing?

3. Why did Countrywide change my loan to one I doubted my wife and I could afford, when my family was going to have nowhere to live if we didn’t sign?

4. Why did Countrywide tell us their copy machine was broken when we signed our lock-in agreement?

5. Why didn’t Countrywide give us a copy of our Lock-in agreement document when we asked for it since the beginning of our mortgage?

6. Why did Countrywide sell our note to Bank of America that we did not want to do business with nor support, and not hand deliver the note?

7. Why are we forced to do business with Bank of America and forced to allow them to service our loan?

8. Why did Bank of America ignore us on 5 modification attempts to our previous lock-in agreement and only answered and told once that we didn’t qualify?

9. Why does Bank of America deny our QWR for all Loan, escrow, Lock-in agreement, and 6 modification attempts, documents?

10. Why does Bank of America Bank of America threaten to foreclose, selling our note, and actually put our loan into default with pre-foreclosure, still denying us our QWR?

11. Why is it legal for real estate companies and internet sites allowed to show our house available in pre-foreclosure, for 2/3 the cost I purchased it for, at a monthly mortgage half of what I am being forced to pay?

12. Why is it ok for Bank of America to foreclose on my mortgage when the amounts due are the same amounts our houses estimated worth has depreciated, due to Real Estate company’s, Countrywide’s and Bank of America’s practices of unequal, racial, judgmental, predatory lending for greed of money with house flipping and greed of money, no matter who it puts on the street and causes to be homeless?

13. Why is it ok for the home builder to tell us they’re not going to fix the cracks in our stucco unless they can fit a nickel inside it?

14. Why is it ok for banks to exercise their legal document rights, ignoring and denying the consumer their documented rights when the consumer cannot afford the greed of an attorney?

15. Why does everyone, banks, governments, other nations and countries think they can do what they do against Americans and God’s true Children everywhere, and get away with it, without judgment from God?

16. Why did the American Government bail out these banks with tax payers money, for doing these things to Christian Americans that choose to be the True Children of God?

Your Judgment is here, life of your own conscience knowledge, truth and action of un-repented sin of mortality and impurity expressed towards existence, reality and destiny, to have life upon and within yourself. They are your truths, beliefs and actions you decided to agree upon and express upon all things existing or going to, even yourself.

Jk815 - 5 years ago    Report SPAM
I don't care what god says selling for half of tangible book is good enough for me

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