B of A puts mortgage headquarters in Calabasas
Bank merger moves forward
By John Loesing newstip@theacorn.com

Bank of America said it will make Calabasas the national headquarters for its lending mortgage business following the acquisition of Countrywide Financial Corp.

The bank, which also announced plans to help reduce the impact of foreclosures on local communities, said it will locate its new, combined national consumer mortgage headquarters in Calabasas once it completes the Countrywide purchase in the third quarter.

Bank of America will operate the consumer mortgage business under the B of A brand. The acquisition will make Bank of America the nation's largest mortgage lender and loan servicer, the role currently held by Calabasasbased Countrywide.

Bank of America announced Jan. 11 it would acquire the troubled mortgage lender in a $4.1-billion stock transaction.

With offices in Calabasas, Agoura Hills, Westlake Village, Thousand Oaks, Simi Valley, Moorpark and Camarillo, Countrywide is the second largest private employer in Ventura County.

"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 Bank of America Global Consumer and Small Business Banking President Liam McGee during testimony at a Federal Reserve hearing in Los Angeles regarding the Countrywide transaction.

The combined company expects to modify and work through at least $40 billion in troubled mortgage loans in the next two years, and company officials said the efforts would help keep at least 265,000 customers in their homes.

Possible job cuts resulting from the merger have not been announced.

Homeowner help

The new company will continue Bank of America's policy of permitting tenants to remain living in properties for 60 days after the completion of foreclosure proceedings. If the tenant voluntarily leaves the property within 30 days of the completion of foreclosure proceedings, they will receive a $2,000 "cash-for-keys" payment to help defray moving expenses.

"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."

Lending guidelines

Following up on its April 22 testimony before the Federal Reserve in Chicago, Bank of America unveiled several new mortgage lending guidelines. Features include:

•Conforming loans underwritten to meet government standards, plus expanded approval guidelines and FHA/VA guidelines designed for lowand moderateincome borrowers.

•Non-conforming loans with terms expected to produce no greater risk of default than conforming loans.

•Interest-only, fixed-rate and adjustable-rate mortgage products, subject to a 10year minimum interest-only period that removes the possibility of short-term payment shock.

•Fixedperiod ARMs that provide borrowers low initial rates with the security of fixed payments, subject to protections against severe step-ups in payment amounts.

The company also said in previous testimony it will continue its prevous policy of not originating subprime mortgages.

And when the Countrywide deal closes, Bank of America said it would discontinue certain nontraditional mortgages, including so-called option-ARM loans in which payments not covering accrued interest often lead to negative amortization.

The bank also said it would "significantly curtail" other nontraditional mortgages, such as low documentation loans, and put additional borrower protections into place, including limits on prepayment penalties and the amount of fallout than can result from risky interest-only and hybrid ARM loans.

New investment

Bank of America said that beginning in 2009 it will pursue a new goal to lend and invest $1.5 trillion for community development over the next 10 years.

Areas of investment will include affordable housing, economic development and consumer and small business lending.

Finally, the bank announced a new 10-year, $2-billion national corporate philanthropy goal.

"Ultimately, we hope to enhance the quality of life in diverse neighborhoods throughout the country, " said Andrew Plepler, president of the Bank of America Charitable Foundation.