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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
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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.

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)
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)
Bank of America President and CEO Kenneth Lewis.
Bank of America President and CEO Kenneth Lewis.   (Getty Images)
A man walks into a Countrywide banking and loan office in San Mateo, Calif., Friday, Oct. 26, 2007. Countrywide Financial Corp. lost $1.2 billion in the third quarter, but its shares soared Friday after the nation's largest mortgage lender said it expects to be profitable this quarter and next...
A man walks into a Countrywide banking and loan office in San Mateo, Calif., Friday, Oct. 26, 2007. Countrywide Financial Corp. lost $1.2 billion in the third quarter, but its shares soared Friday after...   (Associated Press)
The Countrywide Banking and Home Loans office is seen in Glendale, Calif. in this April 26, 2007 file photo. State Treasurer Richard Moore has asked the U.S. Securities and Exchange Commission to investigate the timing of stock sales made by the chief executive of mortgage lender Countrywide Financial Corp....
The Countrywide Banking and Home Loans office is seen in Glendale, Calif. in this April 26, 2007 file photo. State Treasurer Richard Moore has asked the U.S. Securities and Exchange Commission to investigate...   (Associated Press)
The Bank of America and Countrywide branch offices are seen in Pasadena, Calif., Thursday, Jan. 10, 2008. A buyout of mortgage lender Countrywide Financial likely would be approved by regulators, analysts say, because otherwise the company could file for bankruptcy, further disrupting the market for home loans. (AP Photo/Damian Dovarganes)
The Bank of America and Countrywide branch offices are seen in Pasadena, Calif., Thursday, Jan. 10, 2008. A buyout of mortgage lender Countrywide Financial likely would be approved by regulators, analysts...   (Associated Press)
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Bank of America • acquisition • Countrywide Financial • subprime crisis • financial crisis

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