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KAI RYSSDAL: The Federal Reserve’s set for a two-day meeting on interest rates tomorrow and the next day. That means all the bigwigs like Mr. Bernanke will be in Washington. The Fed’s work is never done, though. Fed staffers are in Los Angeles today and tomorrow. They’re holding hearings on Bank of America’s planned acquisition of the troubled mortgage company, Countrywide, which is based out here. If the deal passes muster, BofA would become the largest mortgage lender in the country. Fair lending advocates say that with that market power comes an obligation to help clients avoid foreclosure. Marketplace’s Jeff Tyler was at the hearing.
JEFF TYLER: Cloyed Miller came to the hearing from Rancho Cucamonga, where he bought a home several years ago. Miller says Countrywide mismanaged his loan. And ultimately, he declared bankruptcy.
Cloyed Miller: When I filed in 2007 for bankruptcy, my lawyer told me that 70 percent of her clients were from Countrywide.
Miller thinks Bank of America has a responsibility to clean up Countrywide’s mess. In a written statement, Bank of America says it “expects to modify or work out at least $40 billion in troubled mortgage loans in the next two years.”
But fair finance advocate Alan Fisher with the California Reinvestment Coalition says Bank of America needs to provide more solid details about its plan. Fisher suggests many risky loans need to be re-valued.
Alan Fisher: We think the house should be valued at what it would be at auction. So that it’s the real value now. And then many, we think 75 percent of subprime borrowers, could afford those homes.
Some homeowners will face foreclosure. Democratic Congresswoman Maxine Waters says she’s not asking the bank to shoot itself in the foot financially.
Maxine Waters: We’re not asking them to be irresponsible and put themselves at some great risk of not being paid. What we’re saying is, there are many people, who with a little time and attention, can get work-outs and modifications to help them stay in the loans.
Several proposals to help borrowers and the industry are working through Congress. Bank of America’s $4 billion acquisition of Countrywide is expected to be completed by July.
In Los Angeles, I’m Jeff Tyler for Marketplace.
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