Although Bank of America bucked market expectations by originating more mortgages on a quarter-to-quarter basis in the fourth quarter, the bank saw a significant drop-off in volume on a year-over-year basis.
The Charlotte, N.C.-based bank reported fourth-quarter volume of $13.7 billion, compared with $13.4 billion in the third quarter, but down from $22.1 billion for the fourth quarter of 2019.
For the industry as a whole, Fannie Mae expected fourth-quarter production to be down nearly 7% from the third quarter, to $1.24 trillion from $1.32 trillion.
Among its large bank competitors, Wells Fargo and PNC reported lower volume compared with the third quarter while JPMorgan Chase had increased volume and Citi was flat.
Bank of America reports mortgage volume from two divisions. In the consumer banking division alone, fourth-quarter volume was just under $8 billion, compared with $7.3 billion in the third quarter and $14.6 billion in the fourth quarter of 2019. The remaining volume comes from the global wealth and investment management segment, which works with BofA’s affluent and high-net-worth clients.
Total first mortgage volume for 2020 at the bank was $69.1 billion, down from $72.5 billion in 2019. When production from consumer banking only is measured, BofA did $43.2 billion, down from $49.2 billion in 2019.
The decline in annual volume is noteworthy given that industry economists predict that the final 2020 numbers will show an increase in production over 2019. Fannie Mae projected a record $4.4 trillion in 2020 originations (up from $2.5 trillion in 2019).
Home equity originations for the year fell to $8.2 billion in 2020 from $11.1 billion for the prior year. For consumer banking alone, home equity production fell to $6.9 billion from $9.8 billion.
Nonperforming residential mortgage loans increased to $2 billion in the fourth quarter, versus $1.7 billion in the third quarter and $1.4 billion in the fourth quarter of 2019.
At the same time, nonperforming home equity loans grew to $649 million, up from $640 million from the prior quarter and $536 million the previous year.
Commercial real estate loans in nonperforming status declined to $404 million in the fourth quarter from $414 million in the third quarter, but up from $280 million in the fourth quarter of 2019.
BofA does not break out mortgage banking income separately, but the company reported $51 million on the “all other” line for noninterest income from consumer lending in its consumer banking segment for the fourth quarter, compared with $8 million in the third quarter and $65 million in the fourth quarter of 2019.
For the full year, the company reported $164 million of noninterest income on this line, down from $294 million in 2019.