BoA Touts Conservative Standards to Fed

Bank of America says it is adopting very conservative lending guidelines as part of its acquisition of Countrywide Financial Corp. and is structuring its adjustable-rate and interest-only products to prevent payment shock and provide long-term affordability. The combined mortgage businesses will not originate subprime loans or option ARMs, BoA executive Bruce Hammonds told Federal Reserve officials who are seeking public input on BoA's merger application. Essentially, BoA is pledging to offer its retail customers standard Federal Housing Administration, Fannie Mae, and Freddie Mac mortgage products along with other loans designed for low- and moderate-income borrowers. All interest-only mortgages will have a minimum 10-year interest-only period. Industry insiders have been speculating for months that Bank of America will shut down Countrywide's wholesale channel, which used to purchase subprime and option ARMs from mortgage brokers. A BoA spokesman declined to comment on the future of the wholesale business. Bank of America shut down its wholesale lending operation last fall. The Charlotte, N.C.-based banking giant plans to complete its acquisition of Countrywide in the third quarter. BoA can be found online at http://www.bankofamerica.com.