Goodbye to Countrywide

Bank of America introduced their new brand, Bank of America Home Loans, at locations nationwide. This officially marks the end of the Countrywide brand and starts the transition in converting Countrywide customers into Bank of America. While not the most unique or groundbreaking name, Bank of America Home Loans has several new ideas to provide greater transparency in the mortgage process that are worth mentioning.

Bank of America Home Loans is introducing Clarity Commitment, a one page summary of the borrower’s mortgage that details your monthly payments, the interest rate, and closing costs. This will be provided to the borrower at time of application and at the closing. This replaces the Good Faith Estimate that is typically provided, but Bank of America promises to simplify the language and provide information in a manner that is easy to comprehend.

Also being introduced, is a new loan product called the “Flat Fee Mortgage Plus”, which has no application fee, and one flat-fee closing cost. These closing costs are tiered and will have 3 levels, $1,995, $2,495 or $2,995 depending on where you live. This loan is guaranteed to close on time, is only available for purchase loans, and is likely replacing Bank of America’s “No Fee Mortgage”. When introduced in 2007, the “No Fee Mortgage” was not as popular as Bank of America expected, as consumers saw the offer as suspicious and typically could get a better mortgage rate by paying at least some closing costs.

Bank of America is now offering a satisfaction guarantee, offering to write a $250 check if a borrower shops at Bank of America and still finds another lender more appealing. This offer seems somewhat nominal in the bigger picture of a hundred thousand dollar loan, and I’m sure the fine print on this guarantee is not on the Clarity Commitment.

Lastly, they introduced a new website to help transition existing customers and to provide more information for prospective customers. For anyone looking for a step by step overview of the mortgage process, Bank of America’s Home Loan Guide provides information on the process and help clarifies how banks make their lending decisions.

Overall, Bank of America is taking the right steps in providing transparency to the lending industry. If the rest of the lenders follow suit and start looking out for the borrower’s best interests instead of just trying to maximize profits, hopefully we can slowly rebuild the housing market and provide solid foundation to avoid future housing collapses.

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