“While most attention has focused on the No. 2 U.S. bank’s $35 billion in mortgage losses stemming from settlements and repurchases of soured home loans, information the bank provided to the Federal Reserve in 2008 and recent company reports show the mortgage mess could undermine efforts to improve profits for some time to come.
Bank of America now employs some 42,000 people – or nearly 1 in 6 of its 275,000 employees – in Legacy Asset Servicing, the unit that services problem mortgages. Operating costs in the mortgage servicing business reached $2.7 billion in the second quarter, up 29 percent from a year ago, as the bank added 7,000 workers to handle foreclosure reviews and loan modifications required under government settlements.
The bank has also had as many as 16,000 additional contractors working in the unit, according to company reports.”
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