Bank of America is out with earnings on Tuesday. It had net income of $6.2 billion, or 56 cents per share, but that is not the part I found most interesting in a quick review of the numbers. Instead it is the progress, or lack of same, in getting past all the bad mortgages it sold into securitizations.

FLOYD NORRIS

Notions on high and low finance.

In the quarter, the bank set aside only $278 million for representations and warranties claims. It is that number, not the $1.79 billion in charge-offs in the quarter, that affects reported profit.

I say “only $278 million” because that is the lowest quarterly figure for additions to that reserve at least since the fourth quarter of 2009, which is the first number I could find in a quick review of prior reports.

Here’s the trend:

Q4 2009: $516 million

Q1 2010: $526 million

Q2 2010: $1.248 billion

Q3 2010: $872 million

Q4 2010: $4.140 billion

Q1 2011: $1.013 billion

Q2 2011: $14.037 billion

Q3 2011: $278 million.

On its face, this is good news, a sign the problem is receding. After all, there was a limited number of representations and warranties that Bank of America — and more importantly Countrywide Financial — made, and someday the problem has to be over. The second-quarter provision was a huge one, a deliberate effort to take all the bad medicine there was.

But the decline was not because new claims have dried up. They amounted to $3.8 billion in the quarter, $99 million more than in the previous quarter.

In a commentary, the bank says the new claims come mainly from Fannie Mae and Freddie Mac, the government-sponsored enterprises. (You can find that commentary on Page 31 of the bank’s release.)

The demands from Fannie and Freddie, the bank says, “have become increasingly inconsistent with our interpretation of our contractual obligations.”

The process, it would appear, is getting nastier. The low provision does not mean final settlements are near.

One more note: Of the new claims in the quarter, $164 million came from mortgages sold in 2009 or later, a figure that is higher than in any of the previous quarters. That is well after Bank of America took over Countrywide, and after the mortgage market collapsed. It sounds like Fannie and Freddie are saying that bad practices continued.

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