Bank of America Aquires Countrywide — Announces Home Loan Overhaul
The sale has been completed. Bank of America has now officially taken over Countrywide. As a result, Bank of America is now the largest originator and service of home mortgage loans in the country. Bank of America had praised the high-tech system that Countrywide used to initiate loans, and plans to apply it as well. However, there will be some differences.
Bank of America also announced that it will only focus on certain kinds of home loan programs, and that it will not be giving out subprime loans. National Mortgage News reports on the kinds of home loan programs that will be available through Bank of America in its newer, larger capacity:
BoA said it will focus on “responsible home lending” and plans to offer a variety of first-lien mortgages but no subprime loans. It will also discontinue offering payment-option adjustable-rate mortgages, the company said. Among the first-lien mortgages the company says it will offer are: conforming loans underwritten to standard guidelines of the government and the government-sponsored enterprises; nonconforming loans with terms “expected to produce no greater risk of default than conforming loans”; interest-only mortgages subject to a 10-year minimum IO period; and fixed-period ARMs that provide low initial rates with fixed payments.
It looks as though Bank of America might have learned from the current housing market debacle, and it is encouraging that, going forward, the nation’s largest mortgage lender is likely to remain solvent by giving out less risky loans. Combined with the fact that it is possible that mortgage lenders may be required to disclose how much borrowers would pay after a home mortgage loan reset, there is hope that while this mess can’t really be fixed, another one might be avoided in the future.
