Countrywide Financial, a business name synonymous with the risky lending practices of the subprime mortgage bust, will be quietly retired on Monday by its owner Bank of America.
BofA bought Countrywide in January last year in a deal valued at $4.1bn after the biggest US mortgage lender ran aground on multi-billion-dollar losses. The bank is renaming Countrywide’s operations as part of Bank of America Home Loans, ending four decades of a brand established by Angelo Mozilo, former chief executive.
Under the new name, BofA is trying to distance itself from Countrywide’s reputation for aggressive lending. It has come up with a “clarity commitment” to provide borrowers with a clear breakdown of loan terms, a website dedicated to investor education about the underwriting process, and a new flat-fee mortgage product to protect borrowers from unexpected closing costs.
“Our new brand promise is to always be a responsible lender and to create successful homeowners,” said Barbara Desoer, head of BofA’s mortgage, home equity and insurance services.
“BofA now services one in five of US mortgages, so we want to help set standards.”
Ms Desoer acknowledged the rebranding effort was in part reputational, but said it was also “consistent with a strategy of growing revenue and market share by differentiating ourselves from our competitors”.
She added that Countrywide’s operations had been operating with BofA’s “values” since the acquisition closed.
“Bank of America stopped making subprime loans in 2001 and we stated early on in the integration process that we would operate without the products and practices of the subprime market,” she said.
The bank conducted more than 5,000 interviews and focus groups to develop its new strategy.
“We heard that consumers wanted simplicity and transparency in the mortgage-lending process,” Ms Desoer said.
The bank said it intended to extend the same principles of clear communication to its mortgage-servicing business. Servicers collect home-loan payments and manage troubled mortgages through foreclosure or modification of loan terms.
Ms Desoer said BofA had modified 349,000 mortgages since the beginning of 2008 and had registered for the government’s housing market rescue plan.
Get alerts on Banks when a new story is published