KB Home, the Los Angeles-based homebuilder, said Bank of America, its partner in a mortgage banking joint venture, approached it during its first fiscal quarter asking to restructure the relationship.
The joint venture lost approximately $149,000 for KB Home during the period due to a decrease in loan originations and profits per loan. One year prior, the venture had income of $1.3 million for the homebuilder.
The relationship dates back to Countrywide Financial Corp., which created the joint venture with the home builder during the height of the housing boom. (B of A bought CFC in August 2008, inheriting the relationship.)
KB Home said the two parties are discussing the manner in which mortgage banking services will be offered to homebuyers. "While there are a number of possible outcomes from these discussions, the mortgage banking joint venture continues to operate and the company will remain focused on ensuring that its homebuyers obtain reliable mortgage banking services," KB said in a statement.
For the period ending Feb. 28, KB Home lost $115 million, including an after-tax charge of $45 million for a valuation allowance against the net deferred tax assets generated from the loss. This compares with a 2010 first fiscal quarter net loss of $55 million, including a $21 million after-tax charge.
During the quarter net orders came in at 1,302, down 32% from the year ago period, while the cancellation rate as a percentage of gross orders increased to 29% from 22%.
