Bank of America Buys Countrywide for $4B

Stock package saves nation's largest mortgage lender
By Jim O'Neill,  Newser User
Posted Jan 11, 2008 6:52 AM CST
Angelo Mozilo, Chairman and CEO, Countrywide Financial Corp. speaks during a panel discussion on the subprime market fallout Monday, Oct. 29, 2007, in Beverly Hills, Calif. (AP Photo/Ric Francis)   (Associated Press)
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(Newser) – Bank of America, five months after throwing a $2 billion lifeline to rapidly sinking Countrywide Financial, will pay nearly $4 billion in stock to save the damaged mortgage lender. The deal makes BofA the nation's largest mortgage lender and loan servicer and should help build a bulwark against the still-spreading default crisis, the Wall Street Journal notes. But fund manager Eric Schopf tells Bloomberg: “I hope Bank of America isn’t throwing good money after bad.” 

The BofA offer, $7.16 a share, is 7.6% below Countrywide’s closing price yesterday. Countrywide, the nation’s largest independent mortgage lender, has seen its market value plunge 82% in the past year, dragged down by subprime mortgage failures. BofA, the nation’s largest bank by market value, will acquire some 9 million borrowers and fees from servicing $1.5 trillion of mortgages.