Charlotte Observer (NC) (04/22/08); Rexrode, Christina
Bank of America saw its earnings decline 77 percent during the first quarter to $1.2 billion as a result of the impact of increased provisions for bad loans as housing prices fall and defaults rise. The bank also reports that it has reserved $1.6 billion for future home equity losses, which is more than it set aside for all loan losses during the first quarter of 2007. The volume of home-equity loans on its books was $117 billion compared with $90 billion a year ago; and the bank had $496 million in home-equity defaults that accounted for 1.71 percent of home-equity loans, up from $17 million in defaults, or 0.08 percent. Home-equity defaults could rise to 2 percent by mid-2008, "given softness in real estate values and seasoning in the portfolio," according to CFO Joe Price.
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