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Two of the nation’s largest banks reported earnings this week. Bank of America, which has big consumer banking focus but did not jump on the mortgage bandwagon as aggressively as some of its peer, saw its earnings leap 41%. B of A has been very innovative with new products like its “Keep the Change” accounts, which allow debit card customers to round up their bill to the nearest dollar and deposit the difference in a savings account. Home equity loans were up 16% year-over-year.
Results at Washington Mutual, on the other hand, came in below expectations. WaMu’s net income declined 16% from the year-ago quarter, thanks largely to its mortgage unit which posted a loss. That’s even after WaMu reduced the number of employees in the unit by 21%. Mortgage originations were down as well. “We’re not pushing any panic buttons yet,” writes Morningstar analyst Ryan Batchelor in a recent report. “However, we believe investors will need some patience with WaMu as it wades through a tough housing market—but not a crashing one, in our opinion.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.