Bank of America Vows More Help for Countrywide Mortgage Debtors
Bank of America will expand efforts to help Countrywide Financial borrowers avoid foreclosure on troubled mortgages, a top bank executive said Monday.
The announcement came as members of the Federal Reserve Board convened two days of public hearings on Bank of America’s proposed $4.1 billion stock deal for Countrywide, based in Calabasas, Calif.
The executive, Liam E. McGee, president of Bank of America’s global consumer and small-business banking operation, said the bank would modify at least $40 billion in problem loans from at least 265,000 borrowers over the next two years.
The acquisition, which is expected to close in the third quarter, would make Bank of America, based in Charlotte, N.C., the nation’s largest mortgage lender as well as its largest consumer bank.
Consumer advocates nervous about the takeover have pressed the bank to provide assurances that Countrywide borrowers facing foreclosure would not lose their homes.
The Fed is required to consider whether the deal would harm consumers. It held its initial public hearing last week in Chicago.
In Los Angeles, four members of the Fed will hear from Bank of America executives and scores of speakers from state government, consumer and business groups, and labor unions, among others.
Countrywide said no one from the company was scheduled to testify.
Consumer advocates say Countrywide has not been responsive enough to homeowners having trouble making their mortgage payments.
Alan Fisher, the executive director of the California Reinvestment Coalition, one of the advocacy groups set to testify, has called on Bank of America to give assurances that if the deal goes through, it will modify mortgages into affordable fixed-rate loans and help borrowers who cannot afford new loan terms sell their homes without hurting their credit.
Consumer groups have also sought assurances from Bank of America that it would not make deep cuts in Countrywide’s work force, something they said would slow efforts to help borrowers.
Bank of America said in Chicago that it would tighten mortgage lending standards once it completed the Countrywide acquisition and that it would cease making option adjustable-rate mortgages.
Such loans give borrowers the option to make lower payments, but the unpaid portions are then typically added to the principal balances.