STOCK MARKET WATCH -- Wednesday, 18 July 2012

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41. BofA Profit Rebound Marred By $22.7 Billion In Mortgage Claims

http://www.bloomberg.com/news/2012-07-18/bofa-posts-quarterly-profit-as-moynihan-takes-aim-at-expenses.html

Bank of America Corp.’s second- quarter profit report was marred by record demands for refunds on faulty mortgages, casting doubt on whether improvements in the company’s real estate operations will last.

Net income was $2.46 billion, or 19 cents a share, compared with the year-earlier record loss of $8.83 billion, or 90 cents, with the Charlotte, North Carolina-based company saying today it set aside less money for bad loans. At the same time, demands from bond investors and insurers that the firm take back defective mortgages jumped by more than $6 billion from the previous quarter to $22.7 billion.

“We don’t think this is done,” said Paul Miller, an analyst who follows Bank of America for FBR Capital Markets with a hold rating. “Can they defend themselves and pay only a fraction of that” or will claims “continue to come in and just overwhelm the company?” he asked.

Analysts repeatedly questioned top managers including Chief Executive Officer Brian T. Moynihan during a conference call today about the flawed mortgages, including the extent of future losses and why claims continue to pile up on loans made during the housing bubble. He’s already committed more than $40 billion to resolve disputes on faulty loans and foreclosures, most of them stemming from the 2008 purchase of Countrywide Financial Corp.