Pushing to fast-track its takeover of wounded home-loan goliath Countrywide Financial Corp., Bank of America Corp. 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 and minority neighborhoods, to $1.5 trillion over 10 years, said Liam E. McGee, the bank's top consumer and small-business executive. In addition, the Charlotte, N.C.-based bank will donate $2 billion to charity over the coming decade, up 33% from its current level.
McGee is to unveil the commitments today while testifying at a Federal Reserve hearing on the bank's plan to buy Countrywide, the nation's largest mortgage lender, for $4 billion in stock. The combination would give Bank of America 25% of the U.S. mortgage market. Regulatory approval of the deal is expected, and the bank hopes to win speedy approval and complete the acquisition in July.
Providing a preview of his testimony in an interview, McGee said he was optimistic that the company's "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 smaller mortgage 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 fair-lending advocates who are expected to crowd the two-day hearing at the Federal Reserve building in downtown Los Angeles. The Fed's tentative witness list contained 130 names.
Prominent California advocacy groups such as the Berkeley-based Greenlining Institute said they would support speedy approval of the deal if the bank demonstrated it would lend more responsibly and do a better job of working with troubled borrowers than Countrywide had done.
"BofA could totally dominate the home origination market if this acquisition is approved," George Dean, president of the Greater Phoenix Urban League, said in a statement released by Greenlining. "It therefore has a very special obligation."
