BofA to target $40B in troubled mortgages

Bank of America Corp. says it expects to modify or work out at least $40 billion in troubled mortgages after it closes on its acquisition of Countrywide Financial Corp. in the third quarter.

BofA expects its efforts will keep about 265,000 customers in their homes.

In addition, BofA says it will continue its policy of allowing tenants living in properties facing foreclosure to remain on site for 60 days after the completion of foreclosure proceedings. They will receive $2,000 to defray moving expenses if they leave voluntarily within 30 days of the completion of foreclosure proceedings.

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The bank (NYSE:BAC) says it plans to spend $1.5 trillion over the next 10 years in community-development efforts that focus on affordable housing, economic development and consumer and small-business lending.

Charlotte-based BofA announced in early January it would buy California-based Countrywide (NYSE:CFC) 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.

At that time, Countrywide's stock price was falling amid concerns about its exposure to the subprime-mortgage market. Since then, that market has deteriorated, and Countrywide has fought off rumors of bankruptcy.

BofA will locate the companies' combined national consumer-mortgage headquarters in Calabasas, Calif.