Several months after Bank of America Corp. bought Countrywide Financial Corp., the nation's largest mortgage lender, the executive in charge of integrating the two companies says her top priority is stanching the business runoff sparked by rumors that the deal might be called off.

"Customers, partners were challenging the sales force, asking, 'Is Countrywide going to be around?' and 'Why should I do business with you?' " Barbara Desoer, B of A's president of mortgage, home equity, and insurance services, said in an interview last week.

She says she is satisfied the case has been made, and she rattled off a list of B of A's accomplishments since taking over Countrywide on July 1, including making 250,000 loans to borrowers and booking $51 billion of business in the third quarter.

"We did a tremendous amount of business despite the financial situation that we're in," said Ms. Desoer, who was ranked No. 2 this year on U.S. Banker's Most Powerful Women in Banking list.

Her $1.83 trillion-asset Charlotte company plans to rebrand Countrywide products and offices in the second quarter, and Ms. Desoer expects the housing market to start turning around in the second half. The encouraging signs include last month's rebound in home sales in hard-hit markets like California, she said.

"What that tells me is there are people in the market, whether it's REO properties or not, who are saying rental versus mortgage payments are starting to come into equilibrium," she said. "In combination with people thinking there's a bottom, they're going to buy."

The market will "hit a bottom - we're forecasting sometime in 2009," she said. "The hardest-hit markets are the ones we're forecasting will come back in 2009."

Ms. Desoer, 55, was one of the first executives on the ground at Countrywide's headquarters in Calabasas, Calif., when the $4.1 billion deal was announced in January.

She spent several days a week at Countrywide as B of A's chief technology and operations officer, and initially she worked on combining the two companies' portfolios of mortgage servicing rights, which are valued at about $20 billion.

The fact that Countrywide's servicing platform had enough "scalability" to absorb B of A's was a major driver of the deal, she said. "It was very important, given the size of the asset and given the volatility that's happened in all the markets, because we reduced the risk in that portfolio."

Ms. Desoer said she was surprised at the "deep expertise" of Countrywide's employees, as well as their excitement about being part of a broad financial services brand, rather than a monoline mortgage lender.

"I thought that would be slower to come, and maybe the external environment helped a little bit," she said.

B of A is developing nonagency mortgage products that could be securitized when the secondary market recovers, Ms. Desoer said. It is currently collecting customer data that will be used to roll out the products next year, though she did not specify how they would differ from products it now sells to Fannie Mae, Freddie Mac, or the Government National Mortgage Association through the Federal Housing Administration.

"We've been extracting an extraordinary amount of data from customers on how they view a mortgage provider, a mortgage product, and a realtor today versus six months ago," she said. B of A plans to use that information to prepare for the rebranding in the second quarter.

In addition, B of A is partnering with various industry groups, including "academics who are writing white papers on what the possibilities are for the next generation of the secondary market," to try to influence the market's direction when it comes back, she said.

Ms. Desoer counts among her accomplishments the $8.4 billion settlement this month with 11 state attorneys general over alleged violations of predatory lending rules. B of A has doubled Countrywide's servicing staff, to 5,000 employees, and it completed 200,000 loan modifications before the settlement , which is expected to save another 400,000 borrowers from foreclosure.

Though Kenneth D. Lewis, B of A's chairman and chief executive, has been averse to third-party origination channels, Ms. Desoer said that view changed with the acquisition.

"Ken Lewis' perspective is if we're going to be in a business, we need to have scale, and Countrywide has scale," she said. "We think over time that brokers will remain an important part of the market, and therefore we want to stay in the wholesale business to be able to participate in the growth that will come back to brokers on risk terms we feel comfortable with."

B of A held several town hall meetings and focus groups with Countrywide employees to emphasize the importance of "not hiding, but being out there talking to customers," she said. "They got the message."

Some employees at both B of A and Countrywide want to sit back and wait out the current crisis, Ms. Desoer said, because "it's almost too much to absorb." To that end, she spends a lot of time communicating with and training employees so they "feel prepared for what's out there," because banks tend to capture market share in downturns.

 

 

Originally published by American Banker.