Whatever the terms are, you can be sure BAC isn’t going to skimp on their underwriting or price the loans at a break-even. Given the poor quality of the ARMs they’d replace these loans will probably be an improvement, but only for those borrowers who have the equity and the income to qualify. Frankly, I’d be surprised if more than about 10% of the ARM borrowers are in that position. But 10% is still a pretty big number and BAC probably wants their share of that business.

I think this is a clever marketing ploy to boost BofA’s risk/reward ratio, while sending out positive vibes.
If they focus on refinancing people with sufficient assets they will have effectively moved many people out of their original purchase loan (non-recourse debt) into a refinance loan (recourse debt) and will have improved the risk profile of their debt (assuming they refinance some of their own customers).

Rest assured that they are not doing this out of the goodness of their hearts. However, it may be beneficial to some customers.

By the way, I also am a BofA stock holder. I started nibbling a month or so ago when the stock was below 49.

I found this on CR’s blog.

http://www.bloomberg.com/apps/news?pid=20601087&sid=adciKLm4WGIo

Bank of America Sees `Meaningful Impact’ From Turmoil (Update2)

By Elizabeth Hester

Sept. 17 (Bloomberg) — Bank of America Corp., the second- biggest U.S. bank, said “unprecedented dislocations” in credit markets will have a “meaningful impact” on third-quarter results at its corporate and investment bank.

Trading and other areas of Bank of America’s capital markets and advisory services unit are “being adversely affected by all of these conditions,” Chief Financial Officer Joe Price told investors at a conference in San Francisco today. He cited stress on leveraged finance, subprime mortgages and in the commercial paper market as being especially severe.

“These are quite challenging financial times,” Price, 46, said. “I cannot remember when credit markets in particular have been as volatile and unpredictable as they have been for the last few months

Bank of America joins the growing list of banks and securities firms to warn that the fallout from rising defaults on subprime loans will hurt profit. Merrill Lynch & Co. said last week that “challenging” conditions in fixed-income markets required “fair value adjustments” to certain investments and financing commitments, and any losses will be reflected in third- quarter earnings.

Capital markets and advisory services provided $2.66 billion of Bank of America’s $20 billion of revenue in the second quarter, according to data compiled by Bloomberg. Price said that “in normal times” the unit generates about a third of profit in the company’s corporate and investment bank.

“These are not normal times,” he said.

Flat Profit

Analysts currently expect that Bank of America’s third- quarter profit will be flat compared with last year and earnings per share from continuing operations will rise 3 percent, according to the average estimates in a Bloomberg survey.

Bank of America dropped 44 cents, or less 1 percent, to $49.51 as of 4:16 p.m. in New York Stock Exchange composite trading. The stock was mostly unchanged in after-hours trading.

The company said it expects to close on its purchase of ABN Amro Holding NV’s LaSalle Bank within in a month, after receiving approval from the Federal Reserve last week.

“Bank of America Corp’s legal troubles worsened Tuesday after Nevada’s attorney general sued to undo a broad 2008 loan-modification settlement over predatory lending by its Countrywide unit.”

http://www.lvrj.com/business/state-seeks-to-void-loan-deal-with-bank-of-america-128716618.html

“Bank of America Corp’s legal troubles worsened Tuesday after Nevada’s attorney general sued to undo a broad 2008 loan-modification settlement over predatory lending by its Countrywide unit.”

http://www.lvrj.com/business/state-seeks-to-void-loan-deal-with-bank-of-america-128716618.html