Posted on 27 Apr 2009
A few years ago, Calabasas, California-based Countrywide Financial Corp. was not only the nation's biggest home lender but also highly regarded. However, more recently, the company has been linked with high-risk loans, huge paydays and FBI investigations, and the Countrywide name became "too toxic to resuscitate," according to sources, and a liability for Bank of America Corp., which purchased Countrywide last year as it neared collapse.
Over the weekend, nearly 10 months after the BofA deal closed, Countrywide Home Loans signs came down and Bank of America Home Loans signs appeared at the lender's 215 storefront offices in California. It was the beginning of the rebranding of nearly 1,300 Countrywide mortgage offices nationwide.
"It's the end of an era in the country, but times change," Countrywide co-founder Angelo R. Mozilo said in a brief interview with the LA Times Friday.
He noted that virtually all stand-alone home lenders like Countrywide, along with once-respected banks like World Savings and Wachovia that specialized in tricky adjustable-rate mortgages, had been swallowed by megabanks including Wells Fargo & Co. and JPMorgan Chase & Co. as well as Bank of America.
Countrywide enjoyed nearly 40 years of "a wonderful reputation" and helped millions of people fulfill the dream of home ownership, Mozilo said.
The former Countrywide chief executive wouldn't discuss the company's fall, but he said: "Bank of America is a great company that has done a great job of serving the country, and they will continue to do a great job of serving our customers."
The new storefront signs come with a pledge from Charlotte, N.C.-based Bank of America to serve customers by keeping loans simple and affordable and explaining them clearly.
It was a clear response to complaints about the subprime and exotic loans that inflated the financial returns of Countrywide and other lenders during the housing boom of the last several years. Critics blame that aggressive lending for producing a flood of foreclosures and the deep recession.
"What I hear time and time again in focus groups is that people want no gimmicks, no surprises," said Barbara Desoer, president of Bank of America's mortgage and insurance unit, which is based at the same Calabasas complex that was Countrywide's headquarters.
In an interview Friday, Desoer offered a preview of the new approach to be offered beginning today, which includes an interactive website with customized tools -- designed "to demystify the lending process," she said. The idea is to educate prospective borrowers about how much home they can reasonably afford and what to expect from the bank as they work their way through the loan process.
Bank of America also is introducing a one-page, plain-language summary of a mortgage's interest rate, terms, potential payment changes and other details of the loan. This "Clarity Commitment" document is to be given to borrowers when they apply and again at closing to supplement more complicated government-required disclosure forms.