Pushing to fast-track its takeover of home-loan giant Countrywide Financial, Bank of America will promise today to help 265,000 troubled...
Pushing to fast-track its takeover of home-loan giant Countrywide Financial, Bank of America will promise today to help 265,000 troubled borrowers keep their homes over the next two years by refinancing or modifying at least $40 billion in mortgages.
Bank of America also plans to double its community-development lending, which focuses on affordable housing, small businesses and people in low-income areas, to $1.5 trillion over 10 years, said Liam E. McGee, the bank’s top consumer and small-business executive.
In addition, the nation’s largest retail bank will donate $2 billion to charity over the coming decade, a 33 percent increase.
McGee is to unveil the commitments while testifying at a Federal Reserve hearing in Los Angeles into the bank’s plan to buy the nation’s largest mortgage lender for $4 billion in stock. The combination would give Bank of America 25 percent of the U.S. mortgage market.
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The bank hopes to win speedy regulatory approval and complete the acquisition in July.
McGee said he was optimistic the “responsible and principled approach” would avoid both the pitfalls of old-line banking — doing business only in supposedly safer, affluent areas — and the aggressive lending that toppled Countrywide and hundreds of other firms, producing a monumental wave of foreclosures.
“It’s very much our intent to make mortgages available to the underserved,” McGee said. “But we’re going to make sure that people who get loans from us can repay them and stay in their homes.”
Doing more to help mortgage holders will be the top demand of consumer and advocacy groups expected to crowd the two-day hearing.
“BofA could totally dominate the home origination market if this acquisition is approved,” George Dean, Greater Phoenix Urban League chief, said in a statement. “It therefore has a very special obligation.”
At a Fed hearing in Chicago last week, the bank said it would limit the use of prepayment penalties after the Countrywide takeover, greatly restrict loans on which borrowers do not document their incomes, and would eliminate subprime loans and mortgages that allow borrowers to pay less than the monthly interest, causing loan balances to rise.
Helping 265,000 borrowers retain their homes over the coming two years through refinancings or reworking of loans would keep Bank of America at about the pace of workouts that Countrywide says it achieved early this year.
The advocacy groups say they are concerned because more than a half-million Countrywide borrowers face foreclosure, but McGee said many of those are speculators who don’t deserve help.