bank of america home loans type division of bank of america founded 1969 countrywide february 2009 bank of america home loans headquarters calabasas california usa countrywide financial charlotte north carolina usa bank of america key people barbara j. desoer president of bank of america home loans and insurance revenue 6 061 437 000 us 2007 operating income 1 310 274 000 us 2007 net income 703 538 000 us 2007 parent bank of america website bank of america home loans bank of america home loans is the mortgage unit of bank of america . in 2008 bank of america purchased the failing countrywide financial for 4.1 billion . in 2006 countrywide financed 20 % of all mortgages in the united states at a value of about 3.5 % of united states gdp a proportion greater than any other single mortgage lender . bank of america home loans is composed of mortgage banking which originates purchases securitizes and services mortgages . during the year ended december 31 2005 the mortgage banking segment generated 59 % of the company s pre tax earnings . banking which operates a federally chartered thrift that primarily invests in mortgage loans and home equity lines of credit primarily sourced through its mortgage banking operation . capital markets which operates as an institutional broker dealer that primarily specializes in trading and underwriting mortgage backed securities . global operations which provides mortgage loan application processing and loan servicing . on january 11 2008 bank of america announced that it planned to purchase countrywide financial for 4.1 billion in stock . on june 5 2008 bank of america corporation announced it had received approval from the board of governors of the federal reserve system to purchase countrywide financial corporation . then on june 25 2008 countrywide announced it had received the approval of 69 % of its shareholders to the planned merger with bank of america . on july 1 2008 bank of america corporation completed its purchase of countrywide financial corporation . in 1997 countrywide had spun off countrywide mortgage investment as an independent company called indymac bank . 1 federal regulators seized indymac on july 11 2008 after a week long bank run . 2 3 4 contents 1 history 2 businesses 2.1 mortgage banking 2.1.1 loan production 2.1.2 loan servicing 2.1.3 loan closing services 2.2 banking 2.3 capital markets 2.4 insurance 2.5 global operations 3 controversies 3.1 employee and contract labor issues 3.2 minority and subprime borrowers 3.3 hurricanes katrina gustav and rita complaints 3.4 friends of angelo vip program 3.5 lawsuits 4 subprime mortgage crisis 4.1 secondary market disruption 4.2 announcement of problems and bailouts 4.3 protect our house pr campaign 4.4 takeover 4.5 sec charges 5 finances 5.1 2005 5.2 2006 5.3 2007 6 see also 7 references 8 external links history edit countrywide was founded in 1969 by david s. loeb and angelo mozilo . loeb died in 2003 . 5 the initial public offering was less than successful with company stock trading over the counter at less than 1 per share . in 1985 countrywide stock was re listed on the new york stock exchange under the ticker symbol cfc . countrywide s stock has been described as the 23 000 % stock by fortune magazine . between 1982 and 2003 countrywide delivered investors a 23 000.0 % return exceeding the returns of washington mutual walmart and warren buffett s berkshire hathaway . 6 businesses edit mortgage banking edit the mortgage banking segment produces mortgage loans through a variety of channels on a national scale . nearly all of the mortgage loans the company produces in this segment are sold into the secondary market mainly in the form of mortgage backed securities . in 2006 45 % of those mortgages were conventional non conforming loans loans too large to sell to fannie mae . 5 the company generally performs the ongoing servicing functions related to the mortgage loans that it produces . it also provides various loan closing services such as title escrow and appraisal . the mortgage banking segment consists of three distinct sectors loan production loan servicing and loan closing services . loan production edit the role of loan production is to originate and fund new loans and to acquire already funded loans through purchases from other lenders . loan production produces mortgage loans through four divisions of countrywide home loans consumer markets full spectrum lending wholesale lending and correspondent lending . consumer markets and full spectrum lending offer loans directly to consumers . loans produced by these two retail division are originated funded and sold by countrywide . consumer markets offers a wide variety of products whereas full spectrum lending focuses primarily on products appropriate for customers with less than prime quality credit . wholesale lending offers loans to consumers whose loans are originated by another mortgage broker . these loans are funded and sold by countrywide but originated by other lenders . correspondent lending purchases mortgage loans from other lenders which include mortgage bankers commercial banks savings and loan associations home builders and credit unions . these loans may be sold by countrywide to end investors on the secondary market but are originated and funded by other lenders . loan servicing edit loan servicing services loans i.e. collects payments from the borrower handles escrow accounts tax and or insurance payments if applicable then remits advances to the investor s trustee as specified in the pooling and servicing agreement psa . loan servicing typically retains a fraction of the payment made typically 25 45 basis points of the unpaid principal balance as a servicing fee . loan servicing also generates income in the form of interest on monies received and held prior to paying scheduled advances to the trustee fees charged for late payments force placed insurance document requests legal fees payoff statements etc. loan closing services edit landsafe and its subsidiaries offer loan closing services including real estate appraisal services automated credit reporting products flood determination services and residential title services for the six major counties of southern california . banking edit the banking segment consisted of countrywide bank fsb and countrywide warehouse lending . formerly the bank was known as countrywide bank n.a. a nationally chartered bank that was regulated jointly by the office of the comptroller of the currency and the federal reserve but it converted its charter to a federally chartered thrift that is regulated by the office of thrift supervision . 7 8 countrywide bank is the 3rd largest savings and loan institution and is the fastest growing bank in united states history . assets from deposits are currently approaching 125 billion . countrywide bank primarily originates and purchases mortgage loans and home equity lines of credit for investment purposes . the majority of these loans are sourced through its mortgage banking subsidiary countrywide home loans . the bank obtains retail deposits primarily certificates of deposit through the internet call centers and more than 200 financial centers many of which were located in countrywide home loans retail branch offices as of april 1 2007 . countrywide warehouse lending provides warehouse lines of credit to mortgage bankers who use these funds to originate loans . these mortgage bankers are primarily customers of countrywide home loans correspondent lending division and the capital markets divisions ; the mortgage bankers use warehouse lines of credit from countrywide warehouse lending to help originate loans then sell those loans to countrywide through correspondent lending or capital markets . capital markets edit the capital markets segment primarily operates as a registered securities broker dealer a residential mortgage loan manager and a commercial mortgage loan originator . cfc also operates broker dealers in japan and the united kingdom an introducing broker dealer of futures contracts an asset manager and a broker of mortgage servicing rights . with the exception of its commercial mortgage activities the company transacts only with institutional customers such as banks other depository institutions insurance companies asset managers mutual funds pension plans other broker dealers and governmental agencies . customers of its commercial real estate finance business are the owners or sponsors of commercial properties who can be individuals or institutions . countrywide asset management corporation manages the acquisition and disposition of loans from third parties as well as loans originated by countrywide home loans on behalf of countrywide home loans . these are typically delinquent or otherwise illiquid residential mortgage loans which have primarily been originated under federal housing administration fha and veterans administration va programs . the company attempts to rehabilitate the loans using the servicing operations of countrywide home loans with the intent to securitize those loans that become eligible for securitization . the remaining loans are serviced through foreclosure and liquidation which includes the collection of government insurance and guarantee proceeds relating to defaulted fha and va program loans . securities trading activities include the trading of debt securities in the secondary market after the original issuance of the security . underwriting activities encompass the assumption of the risk of buying a new issue of securities from the issuer and reselling the securities to investors either directly or through dealers . capital markets primarily underwrites mortgage related debt securities . insurance edit this section may require cleanup to meet wikipedia s quality standards . no cleanup reason has been specified . please help improve this section if you can . june 2009 learn how and when to remove this template message the insurance segment activities include offering property casualty life and credit insurance as an underwriter and as an insurance agency and providing reinsurance coverage to primary mortgage insurers through two business units balboa life and casualty operations and balboa reinsurance company . balboa life and casualty group underwrite property casualty life and credit insurance in all 50 states . its products include lender placed property and auto which includes lender placed auto insurance and lender placed real property hazard insurance ; voluntary homeowners and auto which underwrites retail homeowners insurance and home warranty plans for consumers and life and credit which underwrites term life credit life and credit disability insurance products . balboa reinsurance company provides a mezzanine layer of reinsurance coverage for losses between minimum and maximum specified amounts to the insurance companies that provide private mortgage insurance pmi on loans in its servicing portfolio . it provides this coverage with respect to substantially all of the loans in the company s portfolio that are covered by pmi which generally includes all conventional loans with an original loan amount in excess of 80 % of the property s appraised value . in return for providing this coverage it earns a portion of the pmi premiums . global operations edit the primary activities of the global operations segment was global home loans ghl a uk third party administrator tpa formed out of a joint venture between countrywide and woolwich plc in 1998 . activities included loan processing and subservicing providing mortgage loan application processing and mortgage loan subservicing in the united kingdom . following the acquisition of woolwich by barclays plc this relationship developed further with ghl acquiring the barclays mortgage portfolio through a transfer of ownership of the barclays mortgage operation in leeds to ghl in 2003 . by 2005 ghl operation processed more than 11.3 billion 20.3 billion in loans all of which are subserviced for barclays plc the joint venture partner . as of december 31 2005 global s subservicing portfolio was 59 billion 102 billion . in november 2005 barclays announced that it intended to terminate the third party administration arrangement with ghl and bring the mortgage originations and servicing operations back in house . this resulted in countrywide buying out barclays remaining 30 % stake in ghl . barclays brought the operation back in house in february 2006 . since then global s presence in the uk has been confined to providing support to barclays and prudential assurance who continue to use the proprietary originations servicing and arrears processing