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Bank Of America Buys Countrywide

It is 7am on Friday, January 11th and the world of mortgages just got turned over.

Bank of America today agreed to buy Countrywide Financial, the largest U.S. mortgage lender, in a $4 billion transaction that could help avert one of the biggest collapses in the U.S. housing crisis.

Rumors have been flying for months ragarding the problems that Countrywide Financial has incurred with all the mortgage woes. Is this the pill Countrywide Needed? Pill

Details according to CNBC, "Countrywide shareholders would receive 0.1822 of a Bank of America share in exchange for each of their shares. The transaction values Countrywide at $7.16 per share, a 7.6 percent discount to the Thursday closing price.".

Many of us in the business have thought this would be coming ever since Bank of America ha s invested in Countrywide a few months ago. This may not be the end to all the problems that Countrywide has, but it will surley help out. All of us will benefit from the steps that the WHITE KNIGHT, B of A have taken.

CNBC quoted "Some analysts aren't convinced Countrywide is out of the woods, though the lender now specializes in smaller home loans that mortgage financiers Fannie Mae and Freddie Mac
will buy that may be less susceptible to default." I am not you convinced that this will cure all that ails Countrywide, but it will really help the forclosure woes that countrywide is not yet over with.

WHat do you think about this buyout? ANy help to the mortgage industry? Let me know!.

701 E. 22nd St. Suite 125
Lombard, IL. 60148
Cell- 630-306-LOAN (5626)
keith.hoffman@1amllc.com

Posted by Keith Hoffman - 1st Advantage Mortgage Residential Mortgage Specialist on 01/11/2008 07:22 AM

Comments (30)

countrywide, bank of america, keith hoffman, mortgages

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30 Comments on Bank Of America Buys Countrywide

JAN

2008

Keith, From my understanding it is not a done deal yet. If this is true and it does happen only time will tell. It does make sense though because BOA dropped their wholesale division.

If BofA can fix their customer service departments and cater to the "good" Countrywide customers, it may be a great buy!

Matt,
According to the news, CNBC, and a few headlines.

"Countrywide shareholders would receive 0.1822 of a Bank of America share in exchange for each of their shares. The transaction values Countrywide at $7.16 per share, a 7.6 percent discount to the Thursday closing price.".

The Washington Post is reporting that the deal is now done. Here is the article: http://www.washingtonpost.com/wp-dyn/content/article/2008/01/11/AR2008011100781.html?nav=rss_email/components

Tina,
I am not sure anyone can fix their customer service departments as they get so large especially when the do something as large as this. Maybe this will be the spark to the need of change. Thanks

My mom used to work high up in Bank of America when they were NAtions Bank back in the mid 90s their goal then was to become the nations largest bank. Well they seem to be there. Not only have they purchased country wide they have recently merged with LaSalle bank in the Midwest. I am so excited. I love Bank of America it's the best bank ever. Ever since I could have a bank account I have had theirs.

Well, I guess most of us saw this coming. And fortunately, BofA was able to take over Country-Wide.

Heather,
When I lived in California, I banked with B of A and I also liked it. They are expanding into the Chicago area more and more. Thanks for the comments. This will be interesting the next few months. It apparently won't be effective until the 3rd quarter.

Thanks Steve...Love DC!

Does this sale require any sort of government approval?

Derrick,

We all have seen it coming. The funny thing is that just yesterday, I had a person I know well asked me what I thought would happen to Countrywide and I made the call they would be bought out very soon. Then yesterday afternoon, things started to heat up and today we see it happen. Maybe I need to get that crystal ball franchised. Thanks

Kevin,

Very good question. I don't think so.

Either the Folks at B of A are idiots , OR they have some strong feelings about the viablity and profitablity of the housing market. What do you think??

Bank of America, is taking a big risk. A four-billion-dollar deal!! This was the rumor a while back, looks like it may happen, this should be interesting to watch.

I think that they have plenty of money and think that after the fallout of forclusures, new loans will be profitable for years to come. May be pie in the sky thinking but they invested in a company that has many arms of lending including warehouse lines of credit to many many mortgage companies. Just follows their philosophy of being the biggest and best.

Looks like Washington Mutual might be the next to be purchased...by someone like ?

Hmm, Mixed feelings about it. On one hand I do not want to see the fallout that will follow a CW bankruptcy. On the other hand CW competes against brokers and CW is the only other "game" in town so to speak regarding our competitors. All in all depsite my selfish motives for wanting to see CW crash and burn, I hope for the sake of the industry and the economy that they do not.

I hope and pray that this does'nt stop the investigations of Mr. Mozillo and his illegal stock sales. I still want to see him pay for is actions in this whole mess. This company has been hurting people for a long time. Did you hear the story in New York about the forgery of documents? They got caught. This reflects on the upper management and they reflect the owners. Countrywide is/was a crooked company.

It is a done deal, and the only other option that Countrywide had was bankruptcy! No one would buy any loans that Countrywide generated. Some may interpret this as good news, but it is just one company, others to follow. WaMu and IndyMac are a few of the others having issues also. There are tough times ahead.

Christopher - Many of the same thoughts. There would have been a lot of mortgage bankers going out of business if their warehouse lines were with CW & they went BK.

Brandon - Mozillo does seem to be not on the up & up.

Jim- I am sure their will more consolidations in our market before long. I sure hope things won't be too rough. I am too you to retire & be the umbrella man on the beach in Mexico.

It makes sense, since BOA gave them a huge bailout last year. I am curious as to what will happen to all those people who have been pre-approved by countrywide.

Matthew - I am sure that if they have a pre-approval, it will have to be updated to be sure they can buy. WOuld you take a pre-approval from a Countrywide rep right now before having them take to your lender referral? I would think that many of them are still good but with programs they have gotten rid of, I would be sure that the qualification is still in effect.

I'm curious, what has happened to BofA's stock after this purchase was announced. I guess I can look myself but I don't typically follow stock prices.

All the pieces of the puzzle seem to be fitting together now. BofA closed it's wholesale leg, only to buy the largest wholesale leg in the country. What I find interesting is that other banks followed BofA's lead and closed their wholesale leg.

This has been in the works for a while. It appears to be a major power play. Wish I were a fly on the wall in some of those meetings!

JAN

2008

Keith,

Mozillo's going to get a golden parachute of $80 million. It's an upside down world. Thanks for the post, and the comments are fantastic! B of A will have to put a whole lot more than the purchase price into the deal. Kate's right; it would be great to be a fly on the wall!

Mike in Tucson

Bank Of America Stock at the close of Fridays business day

Previous Close	39.30	Bid	NA
Open	39.41	Bid Size	NA
Day's High	39.78	Ask	NA
Day's Low	37.16	Ask Size	NA
Volume	79.12 Mil	52 Week High	54.21
Avg. Daily Vol. (13 wk.)	12.31 Mil	52 Week Low	37.16

Countrywide Stock below

Previous Close	7.75	Bid	NA
fyi Open	6.70	Bid Size	NA
Day's High	6.85	Ask	NA
Day's Low	6.28	Ask Size	NA
fyi Volume	234.16 Mil	52 Week High	45.26
fyi Avg. Daily Vol. (13 wk.)	11.38 Mil	52 Week Low	4.43

Kate- And its not over yet,. Thanks

Keith, interesting, the Countrywide purchase didn't have a positive or a negative impact on BofA's stock. I guess that means, nobody knows what it means.

Now that was confusing. Thanks for getting the stock info for me!

JAN

2008

Interesting indeed. The Feds have been pressuring B of A to help Countrywide out. Remember they lent billions sometime late 2007? Now they own Countrywide. It looks like we're headed for a monopoly in the mortgage business or a major change on how the mortgage business operates. Stand by and hang on to your hats!!!!!

Marie,

You are right. MAjor changes are right around the corner. I will be writing a blog this week on the changes effecting originators via legislation.

JAN

2008

Michael - thanks for the comments. It does look to be a hairy ride for the next year and this transaction will only be the first a few to come.

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Keith Hoffman - 1st Advantage Mortgage Residential Mortgage Specialist

Lombard, IL

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1st Advantage Mortgage

Address: Dupage County, Will, Kane, Cook Counties, Kendall County, Lake County & 38 States, Lombard, IL, 60148

Office Phone: (630) 376-0555

Cell Phone: (630) 306-5626

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