oct 21 2008
NEW YORK, (Reuters) - A lender now controlled by Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz) has been barred by an Illinois banking regulator from offering new mortgages in the state.
The bank, however, said the decision won't keep it from making new Illinois home loans. Countrywide Home Loans Inc was on Thursday issued a conditional license by the Illinois Department of Financial and Professional Regulation. The license allows the former unit of Countrywide Financial Corp, once the nation's largest mortgage lender, only to restructure loans for existing borrowers.
Illinois said it issued the license to allow Countrywide to comply with an Oct 6 agreement with 11 state attorneys general. Under that $8.4 billion agreement, Countrywide agreed to offer relief to nearly 400,000 borrowers with subprime loans or "option" adjustable-rate mortgages serviced by Countrywide.
Bank of America said Illinois' decision won't affect lending operations because the company makes loans in the state through the federally chartered thrift Countrywide Bank FSB. Countrywide Home Loans, in contrast, operates under a state license and has made virtually no loans since 2007, it said.
"Basically, the decision has no impact on us," Bank of America spokesman Terry Francisco said. "It does not affect customers, including those in the process of obtaining mortgage financing." Illinois said it granted the license despite what it called Countrywide's failure in recent years "to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly and efficiently." A department spokeswoman, Susan Hofer, said: "We have no control over what the federal government allows or doesn't allow.
We have a responsibility to the people of Illinois that when they go to an institution licensed by our state, they should be able to trust the company is meeting its obligations to customers.
" Bank of America bought Countrywide for about $2.5 billion at the beginning of July. The bank is based in Charlotte, North Carolina but runs its mortgage operations from Calabasas, California, where Countrywide was based. In early afternoon trading, Bank of America shares were up 22 cents, or 0.8 percent, at $24.47 on the New York Stock Exchange.
Source: http://www.reuters.com/article/marketsNews