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.