Continuing efforts to fast-track its acquisition of Calabasas, Calif.-based Countrywide Financial Corp. (CFC)
, executives at Bank of America Corp. (BAC) unveiled an aggressive mortgage aid plan
Monday morning, ahead of scheduled testimony at the Federal Reserve in Los Angeles. The bank also confirmed its plans to mothball the Countrywide brand upon completion of the merger, and said that it will centralize its mortgage operations in Countrywide's Calabasas-based headquarters.
The plan includes a commitment to workout $40 billion in troubled mortgage loans over the next two years, keeping at least 265,000 borrowers out of foreclosure, as well as a doubling of the bank's commitment to community development lending, according to a press statement released Monday morning. Monday's announcement comes on the heels of last week's announcement that the bank would be pulling back on key lending programs once the merger is complete, in an effort to focus on high-quality mortgage originations.
"We believe the financial strength, security and stability of the combined company will allow us to enable people to buy homes and stay in homes, and to assist many of those affected by the current mortgage troubles," said the bank's top global consumer and small business banking exec Liam McGee during testimony.
Monday's testimony also featured remarks from Rep. Maxine Waters (D-CA), as well as representatives from prominent community groups and public offices, including the office of the California Attorney General. The California Reinvestment Coalition sponsored testimony from witnesses with troubled mortgages who have said that the Calabasas-based lender hasn't done enough to help them, and scheduled a demonstration
outside of the Los Angeles Fed branch for after the hearing as well.
Critics have said that BofA needs to make a strong commitment to working with troubled borrowers and minority communities in the wake of the proposed acquisition, which would ostensibly create the nation's largest mortgage banking operation.
"We will continue to work with distressed borrowers to match the customer's repayment ability with the appropriate loss mitigation option, including loan modifications, forbearances, repayment plans, lower rates and principal reductions," McGee said. "We will not assess new late charges for customers in foreclosure and we will waive certain other associated fees, when permitted."
McGee said that Bank of America would invest $1.5 trillion in community reinvestment funds over the next ten years, an amount equal to double BofA's previous community development goal. The bank also said it will invest an additional $2 billion over 10 years in housing-related philanthropy.
"This new goal raises the bar and is certain to enhance quality of life for millions of Americans in need," McGee said.
Interestingly, Bank of America also touted a commitment to tenants of former owners in a foreclosure -- saying that it had instituted a national policy of allowing tenants to remain in a subject property for up to 60 days after the completion of a foreclosure sale. BofA also runs an aggressive cash-for-keys program in which tenants vacating within 30 days post-foreclosure will receive $2,000 to help defray the cost of relocation.
Legal sources told HW that the plan was relatively aggressive, and a good response to increasing policital pressure tied to lease holders caught in a foreclosure.
For more information, visit http://www.bankofamerica.com
Disclosure: The author was long CFC, and held no positions in BAC, when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.