The letters are going out to homeowners with mortgages serviced by Countrywide Financial Corp.
“We’re pleased to welcome you to Bank of America and Bank of America Home Loans. Your mortgage is with one of the world’s largest and most trusted financial institutions.”
(Trusted? Shares in Bank of America fell 24% Monday after Wall Street saw right through its effort to book a big, first-quarter profit by selling its shares in a Chinese bank.)
The announcement means millions of homeowners will start sending their mortgage payments to Bank of America, which bought the spectacularly failed California mortgage company for $4.1 billion last year.
But that won’t mark the passing of Countrywide Financial Corp. into the history books of financial folly.
Countrywide has been sued so many times its name will live on in the nation’s court system for years.
One of its last acts was to sue American International Group — a legal battle that will undoubtedly show how badly AIG and Countrywide misled borrowers, investors and each other on the way to today’s mortgage and banking crisis.
Countrywide was the nation’s biggest subprime lender, providing hundreds of thousands of borrowers with deceptive adjustable-rate loans they could never afford.
It says AIG has failed to make good on the insurance policies it took out to cover at least some potential losses if those mortgages went bad.
AIG, the world’s biggest insurer, collapsed and is now controlled by the federal government because it wrote so many policies backing loans that were destined to default.
In many cases that coverage was provided through credit default swaps, the unregulated insurance contracts that didn’t require their issuers to have the assets needed to make good on their promises.
So while I’ve written my last check to Countrywide, has AIG?