Servicing issues plague BofA long after Countrywide acquisition
If Bank of America knew back in 2008 what it does today; it’s safe to say the bank may have looked over Countrywide, bypassing it as a potential acquisition target.
That is if you believe the story that BofA wanted the then-stumbling subprime lending giant.
Other analysts have suggested BofA was forced into a bailout situation by monetary policymakers at a time when the nation’s banking crisis was full swing, necessitating high-risk moves to safe beleagured financial institutions.
Others have contended BofA really wanted Countrywide and took a stab at it when it had the chance.
But move ahead several years, and today the banking giant is still tripping over a mortgage servicing mess that shows no signs of clearing up in the near future. It's no coincidence that BofA pulled in assets from one of the largest subprime lenders during the housing bubble years.
Earlier this week, former BofA employees spoke out in court records slamming BofA's practices in dealing with borrowers who applied for loan modifications. The details were brutal — suggestions of deliberate delays, claims of lost paperwork and so on.
During an era where policymakers are especially keen on using the federal government’s Home Affordable Modification Program to help borrowers, the accusations – which BofA vehemently denies – are particularly daunting.
For the bank, it’s too late to say no to a Countrywide deal. And while it’s obvious the foreclosure servicing allegations brought forth this week are most likely tied to loans lingering from the Countrywide days, the bank has come too far now to distance itself from Countrywide's legacy issues.
Instead, some are pontificating that BofA many have another billion-dollar problem on its hands in light of new servicing mishap allegations. But this isn't a first for BofA, the only question is whether it will be the last?