Countrywide Clients Get More BofA Help

Bank of America Corp. will expand efforts to help Countrywide Financial Corp. borrowers avoid foreclosure on troubled mortgages, a top bank executive said.

The announcement came as members of the Federal Reserve Board convened two days of public hearings on Bank of America's proposed $4.1 billion stock deal for Countrywide, of Calabasas, Calif.

Liam McGee, president of Bank of America's global consumer and small-business banking operation, said the bank will modify at least $40 billion in problem loans from at least 265,000 borrowers over the next two years. That figure includes borrowers from both lenders, although the majority of the at-risk loans are held by Countrywide borrowers, Mr. McGee said after he delivered his testimony.

The company will offer borrowers several options, including loan modifications and payment forbearance. It won't charge borrowers in foreclosure new late charges, and, in some cases, will waive prepayment penalties, Mr. McGee said.

"Bank of America will continue to offer home-loan products to those who can afford them," Mr. McGee said during the hearing. "We also recognize that some consumers who are experiencing financial challenges but who ultimately have the ability to pay their loans need our help to pay their loans, and we are ready to help them."

The acquisition, which is expected to close in the third quarter, would make Charlotte, N.C.-based Bank of America the nation's largest mortgage lender in addition to the nation's largest consumer bank.

The Fed is required to consider whether the deal would harm consumers. It held its initial public hearing last week.

Consumer advocates nervous about the takeover urged the Fed to require Bank of America to give more specifics on how it will work with borrowers to keep them from losing their homes and improve customer service for borrowers seeking assistance.

"We believe the proposed merger should not be approved without substantial conditions," testified Kevin Stein, associate director of the California Reinvestment Coalition, an umbrella organization for consumer advocacy groups. In a reference to Bank of America's $40 billion plan to help at-risk borrowers, Mr. Stein said, "To put a dollar figure and say this is what we're going to do is not necessarily a solution to the problem, especially in California."

Consumer advocates contend that Countrywide hasn't been responsive enough to homeowners having trouble making their mortgage payments. They have also sought assurances from Bank of America that it won't slash Countrywide's work force, which they said would slow efforts to help borrowers. Mr. McGee said the combined companies would have at least 3,900 employees engaged in customer support for at least a year.