Thursday, April 24, 2008 - 11:47 AM HAST
Bank of America to ax Countrywide namePacific Business News (Honolulu)
Bank of America Corp. plans to drop the Countrywide Financial moniker after it closes on its purchase of the troubled mortgage lender later this year.
California's largest bank generally drops the name of an acquired institution. (Keeping the U.S. Trust brand last year was an exception.)
BofA may be eager to distance itself from the Countrywide brand, given the scrutiny its lending -- and collection -- practices are now receiving in the wake of the nation's housing bubble.
BofA (NYSE: BAC) CEO Ken Lewis told shareholders at that bank's annual meeting in Charlotte, N.C., of the plans to discontinue using the Countrywide (NYSE: CFC) name.
Earlier this week, the bank disclosed in testimony to the Federal Reserve that it plans to boost Countrywide's lending standards, eliminating altogether subprime loans and option adjustable-rate mortgages that include a feature in which the loan balance actually rises over time if borrowers routinely make the minimum payment permitted.
Lewis also reiterated his commitment to the Countrywide acquisition, which is expected to close in the third quarter.
BofA announced in January that it would buy Countrywide in an all-stock transaction worth about $4 billion. Later that month, Countrywide said 33.64 percent of its subprime mortgages were delinquent at the end of 2007. That was up from 29.08 percent in September and 21.22 percent in December 2006.
In August, BofA invested $2 billion in Countrywide, the country's largest mortgage lender. BofA's investment came in the form of a nonvoting convertible preferred security yielding 7.25 percent annually. The security can be converted into 16 percent of Countrywide's common stock.
San Francisco Business Times
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