April 23, 2008
In November, Mary Donoghue, a housing counselor at the North Side Community Federal Credit Union, began calling Countrywide Financial Corp. on behalf of a client eight months behind on her mortgage.
"It took more than 10 calls and numerous e-mails over three days to get in touch with a helpful customer-service representative," Donoghue recalled Tuesday.
Her work, however, was just getting started. It took another month to reach a workout negotiator for the nation’s biggest mortgage lender, and at least another month after that—and more voice mail and e-mail black holes—before the client’s loan was modified.
"Under no circumstances should this process take three to four months to complete," she said.
Donoghue was one of about 50 individuals testifying at a Federal Reserve Board hearing Tuesday on Bank of America Corp.’s proposed $4 billion acquisition of Countrywide, which early this year was on the verge of financial collapse.
Some critics at the hearing in Chicago opposed the deal on grounds ranging from a reluctance to bail out Countrywide to BofA’s own business practices, such as charging what they believe are excessive credit card fees and making loans to payday lenders. Several groups, including North Side Community, were neutral on the deal but raised concerns. Others lauded BofA’s charitable track record of supporting community groups and backed the deal.
But Donoghue and others saved their harshest words for Countrywide, which didn’t attend the hearing. Three BofA executives testified at the meeting.
"Our local partnership with Bank of America is strong, but our experience with Countrywide has been abysmal," said Christine Schrey, a Northwest Side Housing Center board member. She cited "little to no communication" with the lender and an "unwillingness to develop work-out solutions" for homeowners.
Countrywide didn’t respond by Tuesday evening to a request for comment.
At the hearing, Jesse Jackson, president of Rainbow/PUSH Coalition, testified that he was neither supporting nor opposing the deal, but he did raise questions about how BofA will address the financial, legal and moral liabilities of Countrywide.
Speaking before about 200 people at the hearing, some wearing "Stop Loan Sharks" T-shirts, Jackson said he has worked with BofA Chief Executive Ken Lewis over the years and knows him to be "a man of integrity."
He urged BofA to place a moratorium on foreclosures, freeze existing rates and restructure mortgages into 30-year fixed-rate loans with a 6 percent interest rate cap.
Jackson also called on BofA to respond to Fair Finance Watch data showing that it puts blacks into higher-cost loans nearly twice as frequently than whites.
"When Bank of America completes its purchase of Countrywide, we will have changes in lending practices and products, enhanced consumer protections and a substantial number of avoided foreclosures in the Countrywide portfolio," BofA said in a statement in response to Jackson’s comments.
Tom Feltner, policy director for Woodstock Institute, a Chicago-based housing research group, testified that BofA should modify Countrywide’s problem loans into 30-year fixed-rate loans, maintain existing staffing levels and be held accountable for Countrywide’s lending practices.
"It’s extremely likely the Fed will approve this merger," Feltner said later, "but because of the hearings it’s more likely that the concerns will factor into how the merger takes shape."
BofA expects the deal to close in the third quarter.
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