July 19, 2012- The results for the second quarter at Bank of America were marred due to a record number of claims for refunds from faulty mortgages. This has cast doubt as to whether the lender will be able to maintain its improvements in its real estate division. A lowering of reserves for the bank’s bad loans helped the North Carolina based banking company turn a profit of $2.46 billion during the second quarter. Last year, during the same quarter the bank reported a loss of $8.83 billion.
The bank said fewer borrowers have fallen behind this quarter on loan payments. However, the bank said that demands to get buybacks from insurers and mortgage-bond investors spiked during the second quarter to over $22.7 billion.
Analysts questioned top managers on a conference call including Brian Moynihan the CEO. They wanted to know about the demands for the buybacks and why the claims continue to increase on loans from as long ago as six years. Over $40 billion has already been committed to resolve any disputes on the loans and any foreclosures.
Bank of America is the second largest bank by assets in the U.S. In early trading on Wednesday, the stock was down by 3%. However, thus far during 2012, the bank is leading the Dow with a 37% increase.