On April 17, Bank of America Corp. notified student-loan packager First Marblehead Corp. that it would no longer offer private student loans, focusing instead on providing federal student loans. Bank of America’s announcement comes amid increasing unsteadiness in the federal student loan market, where nearly 50 non-government lenders in the last six months have suspended their federal student loan programs.
Bank of America exercised its right to terminate its agreement with First Marblehead after The Education Resources Institute, the Boston-based nonprofit that guaranteed the loans packaged by First Marblehead, voluntarily filed for Chapter 11 bankruptcy protection on April 7, 2008.
Bank of America’s decision delivered yet another financial blow to First Marblehead, whose shares have already been on a downward spiral over the past few weeks, tumbling 37 percent on April 8 alone, the day after TERI filed its bankruptcy petition.
Shares in First Marblehead fell another 17 percent to $3.37 on the heels of Bank of America’s announcement, with the stock down nearly 91 percent over the past year. The loans originated by Bank of America accounted for about 15 percent of First Marblehead’s total revenue for the 2007 fiscal year, according to a Boston Business Journal article (“First Marblehead Loses Major Customer, Revenue Source,” April 18, 2008).
Thursday, May 8, 2008
Bank of America Backs Out of Private Student Loan Business
Tuesday, May 6, 2008
Bank of America Pledges Help to Troubled Owners.
With the takeover of home-loan giant Countrywide Financial Corp imminent, the Bank of America took time off its round table negotiations to promise help to the troubled 265,000 borrowers struggling to keep their homes over the next two years by refinancing or modifying at least $40 billion in mortgages.
Bank of America also plans to double its community development lending, which focuses on affordable housing, small businesses and people in low-income and minority neighborhoods, to $1.5 trillion during 10 years, said Liam E. McGee. "It's very much our intent to make mortgages available to the undeserved. But we're going to make sure that people who get loans from us repay them and stay in their homes."
According to reports from The Times, the nation's largest retail bank also plans to donate $2 billion to charity over the coming decade, a 33 percent increase from its current level.
McGee is expected to unveil the commitments Monday while testifying at a Federal Reserve hearing on the bank's plan to buy Countrywide, the nation's largest mortgage lender, for $4 billion in stock.
Bank of America Pledges Help to Troubled Owners
By: MortgageLoan.com
