Bank of America reiterated it’ll continue its long-established policy of not originating subprime mortgages. As announced previously, Bank of America will discontinue certain non-traditional mortgages – including option-ARM loans. It will significantly curtail various other non-traditional mortgages, like certain low-documentation loans and may implement enhance borrower protections with time included in the transition process.
Mortgages are some of the three main cornerstone consumer financial products along with deposits and bank cards, said Bank of America Chairman and Chief Executive Officer Kenneth D. Lewis.
This purchase significantly increases Bank of America’s market share in consumer real estate, in addition to being our companies combine, we presume Bank of America will manage to benefit from excellent systems plus a broad distribution network which will offer more ways to fulfill our customers’ credit needs.
To make te nation’s leading mortgage originator and servicer. Bank of America will give attention to responsible home lending, serving as a trusted method to obtain mortgages for that American consumer. Bank of America will also assist new and existing customers by choosing the proper product to satisfy their demands.
As previously announced in April, Bank of America plans to provide the following forms of first-lien mortgages: conforming loans underwritten to standard guidelines of government-sponsored enterprises as well as the government, including FHA and VA loans and other loans made for low-and-moderate- income borrowers; non-conforming loans with terms anticipated to produce no and the higher chances of default than conforming loans; interest-only fixed-rate and adjustable-rate mortgages (ARMs) which might be subject to a 10-year minimum interest-only period, which lessens the possibility of short-term payment shock, and fixed-period ARMs that supply borrowers low initial rates with all the security of fixed payments, be subject to protections against steep increases in payment amounts.
Countrywide’s existing customers eventually will gain access to a diverse group of consumer financial loans such as bank cards and deposit services. The combined company will become originating mortgage and home equity products within the Bank of America brand by mid-2009.
Now we begin to mix both the companies and prepare to introduce our new name and way of operating, said Barbara Desoer, a president with the combined mortgage, home equity, and insurance businesses. We have the chance to renew America’s confidence in home ownership with unmatched capabilities to offer the merchandise home buyers need and understand and provide customers an easy process and service experience they’ve arrived at expect.
The company anticipates substantial cost benefits from combining the two companies. Cost reductions should come from a range of sources, such as the reduction of positions announced yesterday, and also the reduction of overlapping technology, vendor and marketing expenses. In addition, the organization is anticipated to benefit by leveraging its broad product set to deepen relationships with existing countrywide customers.
As previously announced in April, Bank of America will pursue a fresh goal to lend and invest $1.5 trillion for community development over the next decade beginning in 2009. The goal will target affordable housing, economic development and consumer and small enterprise lending and replace existing community development goals of both companies.
Under the terms in the agreement, shareholders of Countrywide received .1822 of a share of Bank of America stock in exchange for each share of Countrywide. The combined company will modify or workout about $40 billion in troubled home loans within the next 2 years and these efforts can keep an estimated 265,000 customers inside their homes. The combined loss mitigation staffs will probably be maintained at the amount of a lot more than 3,900 for around one full year.
Bank of America
Countrywide, once the US’s largest subprime mortgage company and something of their former executives has been located accountable for fraud by a New York jury. The lender is now owned by Bank of America, along with the decision marks the first time a bank has been discovered by a US court to be to blame for wrongdoing linked with its dealings within the financial crisis.
Bank of America is one of the world’s largest loan companies, serving individual consumers, small, middle market businesses and huge corporations using a full variety of banking, investing, asset management as well as other financial and risk-management services and products. The company provides unmatched convenience within the United States, serving a lot more than 59 million consumer and small enterprise relationships with greater than 6,100 retail banking offices, nearly.
Bank of America is the No. 1 overall Small Business Administration (SBA) lender inside the United States and also the No. 1 SBA lender to minority-owned smaller businesses. The company serves clients in over 150 countries and contains relationships with 99 percent with the U.S. Fortune 500 companies and 83 percent in the Fortune Global 500. Bank of America Corporation stock (NYSE: BAC) is a component from the Dow Jones Industrial Average which is listed on the New York Stock Exchange.
Countrywide is discovered guilty of defrauding federal mortgage giants Fannie Mae and Freddie Mac since the height from the housing crisis. The government claims Fannie and Freddie designed a gross loss in $848m on suspect loans they purchased in Countrywide – what can government entities stated it could be trying to recoup from BoA.
Prosecutors inside the office of Preet Bharara, the US attorney for your southern district of New York, alleged that Countrywide ran a scheme called “Hustle” ahead of the collapse, targeted at funneling a rapidly deteriorating portfolio of mortgage loans on Fannie and Freddie. The Hustle (or HSSL, for High-Speed Swim Lane) program stripped back underwriter reviews for loans, leaving few to no controls inside the loan approval process.
The jury also found former Countrywide executive Rebecca Mairone accountable for fraud. Mairone was the only real individual named being a defendant inside the government’s lawsuit. Countrywide was bought by Bank of America in 2008 because the housing industry spiraled towards a collapse driven by bad lending and speculation.
Countrywide assured Fannie and Freddie that underwriting standards were tightened. Employees solely based on the volume of loans originated, resulting in a rampant installment of fraud and other serious defects,” Bharara alleged.
Most with the wrongdoing occurred before Bank of America acquired Countrywide, however, it continued into 2009, “well after” the acquisition, the lawsuit had said.
Bank of America said hello plans to appeal. It said in a very statement: “The jury’s decision concerned just one countrywide program that lasted a few months and ended before Bank of America’s acquisition in the company. We will evaluate our selections for appeal.”