| LOS ANGELES
LOS ANGELES Bank of America Corp (BAC.N) said
on Monday that, as part of its acquisition of Countrywide
Financial Corp CFC.N, it expects to modify at least $40
billion in mortgage loans to help homeowners.
The second-largest U.S. bank unveiled its plan at a public
hearing on the $4 billion merger at the Federal Reserve Bank in
Los Angeles, near where Countrywide is based.
Bank of America appeared to win cautious support from
housing advocates and others who pegged Countrywide as the
epicenter of the U.S. mortgage crisis, and who called on the
central bank to approve the merger -- with strict conditions.
U.S. Rep. Maxine Waters of California, who condemned the
Fed for failing to foresee the nation's housing crisis,
described the transaction as "one of the most important ... in
recent memory" and warned Fed governors to "get this right."
"I would be less than candid ... if I said I was filled
with confidence that it would do so in light of the
institution's lackluster record during the run-up to this
crisis," she told a standing room-only hearing.
Waters said outside the hearing it was unclear whether the
pledged $40 billion in loan modifications and "workouts" over
two years was enough to stave off foreclosures for most
homeowners who could stay current on mortgages with lower
"It's being advanced in a vacuum," she said.
Bank of America expects the plan to help at least 265,000
customers stay in their homes.
California, especially the Los Angeles suburbs of Riverside
and San Bernardino, have been hard hit by the subprime mortgage
crisis, with some streets nearly emptied by foreclosures.
Countrywide is based in Calabasas, another suburb.
Bank of America agreed in January to acquire Countrywide
after credit markets tightened and borrower defaults soared.
The bank said it plans to operate the combined business
under its own brand name and base the combined consumer
mortgage operations in Calabasas. It expects to close the
transaction in July.
DETAILED PLAN SOUGHT
Waters and housing advocates pressed the Fed to require
Bank of America to present a detailed plan for dealing with as
many as 600,000 "distressed" Countrywide homeowners, as well as
the impact of the rising number of empty and foreclosed homes
"One thing that concerns and worries me is what are we
doing in the short term?" said Orson Aguilar of the Greenlight
Institute, a minority housing advocacy group. "Mitigation
strategies have failed our communities. This is the perfect
time for creativity."
Doris Koo, chief executive of Enterprise Community Partners
and who supports the merger, said the bank also should turn
over foreclosed houses it cannot sell to nonprofit housing
groups to be turned into low-income communities.
The housing advocates also said Bank of America and other
banks should spend as much effort and advertising dollars on
loan workouts as they do trying to attract new borrowers.
Outside the hearing, Alan Fisher, executive director of the
California Reinvestment Coalition, and about two dozen
protesters picketed to pressure the bank to provide fixed-rate,
long-term mortgages on auction-value loans for qualified
The bank should help those who cannot make payments with
short sales of their homes to avoid damaging their credit,
"What they said is positive," Fisher said. "But we came to
oppose the merger unless there is a concrete plan for
(Additional reporting by Lilla Zuill; Editing by Andre