Before the financial crisis, mortgages kept banking thriving. Once the crisis hit, however, earnings fell dramatically. Mortgage lending today is a completely different game.
According to Boston.com:
“Bank of America, the country’s second-biggest bank, reported Wednesday that mortgage originations jumped over a year ago- up 18 percent to $21 billion. But the mortgage unit still lost money as the bank worked through problem mortgages issued before the crisis.
“It’s the latest sign that five years after the housing bubble burst, mortgages remain thorny for the banking industry. They still drive revenue, but banks are getting hit with expensive reminders of the risky mortgage lending of last decade, in the form of lawsuits, foreclosures and regulatory headaches.”
Bruce Thompson, Bank of America’s chief financial officer, mirrored recent statements from JPMorgan Chase and Wells Fargo, saying:
“I think we’ve clearly begun to turn the corner.”
Home prices are indeed rising slowly but consistently. The recovery is fragile, though, of course. Thompson said he’d remain “a little bit cautious because there are headwinds out there.”
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