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Bank Of America Tries To Stem Rising Foreclosures

Says its acquisition of Countrywide will help distressed homeowners

April 29, 2008

The company, which is seeking approval to close its merger with Countrywide Financial Corp., said the writedowns would occur over a two-year period and are aimed at stemming the ever-rising tide of foreclosures.

At the same time, a new government report shows a record number of residential properties are sitting empty because of rising foreclosures and declining sales.

"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 the modified loans will keep at least 265,000 customers in their homes.

In addition to foreclosure prevention efforts, the combined company will continue Bank of America's policy of permitting tenants to continue living in properties subject to foreclosure 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."

While bank of America hopes to prevent future foreclosures, past and present foreclosures have resulted in a record number of vacant homes in the U.S. The U.S. Census Bureau reports that in the first quarter of 2008, the percentage of previously owner-occupied homes rose to 2.9 percent.

It was the third quarter in a row the vacancy rate has risen. The number of vacant U.S. residential properties now stands at 18.6 million, according to the Census Bureau report.

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