BoA to Mitigate Foreclosed Countrywide Loans.

Washington -- Bank of America is promising regulators it will devote substantial resources to prevent foreclosures after it takes control of Countrywide's $1.47 trillion mortgage servicing portfolio.

BoA president Liam McGee told Federal Reserve Board officials last week his company will use the appropriate loss mitigation tools, "possibly principal reductions," to help distressed borrowers.

"And through focused effort and determination, we expect our combined company over the next two years will successfully modify or work out at least $40 billion in troubled mortgage loans, helping at least 265,000 customers remain in their homes," Mr. McGee said.

The BoA president of global consumer and small business banking testified in Los Angeles at a public hearing on its application to acquire Countrywide Financial Corp., which is based in Calabasas, Calif.

He noted that BoA and Countrywide have staffed up their servicing departments and the combined company will maintain a loss mitigation staff of 3,900 to assist distressed borrowers.

"I'd like to announce that we will maintain no less than this level for at least one year after the acquisition," Mr. McGee said. He also pledged that BoA will headquarter its mortgage business in Calabasas. BoA is based in Charlotte, N.C.

With the Fed's approval, BoA plans to complete the acquisition of CFC in the third quarter.