Bank of America Announces Home Lending Guidelines

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RISMEDIA, April 23, 2008-This week, Bank of America said it expects to implement new lending guidelines in its consumer mortgage business as soon as is practical after it combines operations with Countrywide Financial Corporation.

Following the purchase, which is expected to close in the third quarter, Bank of America will continue to offer a broad range of mortgages to meet the needs of qualified borrowers, while evolving lending practices to reflect a dramatically different mortgage environment.

“Putting and keeping Americans in their homes ensures the continued prosperity in the communities we serve,” said Bank of America Global Consumer Credit Executive Bruce Hammonds. “We believe this purchase is a positive step forward because it offers customers access to a full range of banking services, best-in-class mortgage products and offers the trust and integrity that customers, associates and shareholders have come to expect from Bank of America.”

In testimony before the Federal Reserve in Chicago, Bank of America unveiled new mortgage lending guidelines. Following the purchase, the combined mortgage business plans to continue to offer retail customers the following types of first lien mortgages:

– Conforming loans underwritten to standard guidelines of government-sponsored enterprises and the government, including FHA and VA loans and other loans designed for low-and moderate-income borrowers.

– Interest-only fixed-rate and adjustable-rate mortgages (ARMs) that are subject to a 10-year minimum interest-only period, which lessens the possibility of short-term payment shock.

– Fixed-period ARMs that provide borrowers low initial rates with the security of fixed payments, subject to protections against steep increases in payment amounts.

The company also said it expects to continue its long-established policy of not originating subprime mortgages. Following the purchase, Bank of America expects to make the following changes to certain home loan products offered by the combined mortgage business.

– Discontinue non-traditional mortgages where monthly payments may not cover all interest, or so-called option-ARMs.

– Significantly curtail other non-traditional mortgages, such as certain low documentation loans.

– Implement enhanced borrower protections soon after completion of the Countrywide purchase, including limits on prepayment penalties and protections on non-traditional loans such as interest-only and hybrid ARMs, which limit the risk of future payment shock and provide long-term affordability.

“We think it’s important to clearly explain the changes in mortgage lending practices once we operate as a combined company,” Hammonds said. “We recognize this tightening, by definition, restricts the availability of credit to some borrowers. However, this will help ensure that those who get loans can afford to repay them.

“Along with these responsible mortgage products, we will provide customers with the tools to understand and make informed choices about what product is best for them,” Hammonds said. “This will be achieved through a combination of sales practices, borrower education, disclosures and fair product terms.”

Additionally, the Bank of America Charitable Foundation and Countrywide announced they plan to provide $35 million in grants and low-cost loans to both help local and national nonprofit organizations engaged in foreclosure prevention, and to purchase vacant single-family homes for neighborhood stabilization. The goal, through 2009, incorporates foreclosure prevention efforts by both financial institutions.

Under the program, the foundation has already allocated $10 million in direct grants to enhance the capabilities of nonprofit organizations focused on foreclosure prevention counseling and mitigation to assist an increasing number of distressed homeowners seeking assistance with interest rate adjustments. An additional $20 million will be directed toward grants as well as lending and investing efforts in communities impacted by foreclosures.

“Foreclosures have devastating social and economic consequences for families and communities,” said Andrew D. Plepler, president, Bank of America Charitable Foundation. “Both Bank of America and Countrywide recognize that we have a shared responsibility to strengthen our neighborhoods by helping keep individuals and families in their homes. We are pleased to do our part to address this ongoing crisis.”

Countrywide, in conjunction with its community partners, has allocated $5 million for neighborhood stabilization and foreclosure prevention through 2008.

For more information, visit http://www.bankofamerica.com.

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