Thursday, January 10, 2008

Bank of America in talks to acquire Countrywide Financial

From the Wall Street Journal:

“Bank of America Corp. is in advanced talks to acquire struggling Countrywide Financial Corp., according to people familiar with the situation.”

“It isn't clear how quickly a deal might be struck, but two people familiar with the matter said it could occur very soon. It also is possible that an agreement could be delayed or fall apart altogether.”

“The market value of Countrywide has plunged to about $3 billion, which represents about two months' profit for Bank of America. The Charlotte, N.C., bank paid ...”

Read full article [WSJ subscription needed]

Countrywide has been struggling with the U.S. housing slump, and on Wednesday said foreclosures and late payments among home loans for which it collects payments rose to the highest levels on record in December.

"‘Somebody is going to have to absorb the massive losses in right-positioning Countrywide,’ said Sean Egan, managing director of credit-rating firm Egan-Jones Ratings Co. ‘It can be done, but the cost is going to be exorbitant. From Countrywide's perspective, it is their best chance for salvation.’"

Shares of Countrywide Financial (CFC) surged 51% to 7.77.



upthecreek said...

posted by Cramer in Feb of 2007
"Ya right Mr Bobblehead"

Countrywide Still Looks Like a Buy

By Jim Cramer Columnist
2/6/2007 3:19 PM EST

The conundrum of Countrywide going up even as another subprime dealer, Mortgage Lenders Network, goes under, may be answered by a simple tenet: The weak hands are going under, leaving the biggest and best to triumph.

When I pulled up with Angelo Mozilo, the man who built Countrywide -- the man who is Countrywide, some would say -- we joked about how strong Countrywide's business is because it has always "modeled" the bad loans better than anyone. One of the mistakes made by the analyst community is believing that any loans that go under could be death to a lender. In truth, the good ones model what will happen under a lot of scenarios, and it is pretty clear that Countrywide has the best models. Always has.

When the company's stock got bid up on takeover rumors, despite insider selling, I expected it to come right back down.

It didn't because what's really happening is the long-awaited shakeout. There have been too many crummy players in this business. You are seeing the small ones go under -- and some larger private ones, too. What you aren't seeing is the pullback in the major brokerages' business that is emblematic of a recognition that the margins got too bad in the subprimers that they bought to get the flow for mortgage back. You heard this if you listened closely on all the big brokers' conference calls.

If the brokers are pulling back and the smaller independents are going belly up, that leaves Countrywide to reap the benefits of the inevitable expansion in margin that comes from the end of the price wars for subprime.

That's why it is going up. That's why it will continue to go up. That's why Countrywide is still a buy, despite the problems in housing and the headlines about how bad this business is.

Anonymous said...

Nice post! Let's see what bonehead has to say tonight. A month or so ago his site ( was making fun of Mozilo with a youtube cartoon. F* bums. Should all be put to jail.

2and20 said...

congratulations dimitris, you finally killed them :)

got equity said...

They didn't model anything better than anyone. The business model was based on being a high volume middleman pumping out exotic loans and when investors stopped buying the garbage, their game was up. They can offer conforming 80% LTV mortgages, but how are they any better at this than any bank or credit union?

Mary Popins said...

I see your blog has something to do with the Bank Of America. Although, at the present time, one can not do without the bank services, still I think it could have been better without them. People face so much problems and misunderstandings because of these financial establishments. Learn on other people’s mistakes from It is a very informative and helpful site.

realtor said...

what ever happened with this situation? I dont know how smart of a move it would be for BOA

Kinkypupper said...

My name is Phillip Moulton I am 54 yrs old; I in the last 30+ years have done the best that I could.
I purchased a modest home in Portland, Oregon under the Oregon GI Bill in approx. 1978 for 38k.
I have raised “well I think” 4 children to adulthood and influenced many more.
I retired from the Oregon National Guard after 20 years when I developed cancer, I served in Europe for three years in the military, and I have voted every year since I could and studied the candidates. I have taught my children that there are more important things then financial gains and gave them all I could in the hopes that they would have a better life.
I had a savings or checking acct (and a business acct.) with Bank of America even before it was Bank of America in Oregon. (Benj. Franklin Savings and Loan) since the mid 1960’s
I have made mistakes but we all have and I accept them.
I had to refinance my home in the 80’s to pay medical bills due to my Cancer. I felt that the VA Medical system was for those who served in combat and I was not worthy of that benefit. I also refinanced it in the mid-late 90’s due to a broken neck I received. Again they put me back together and were due all I owed them. (Again no health insurance)
I owned my own business for 20 yrs repairing Typewriters, Computers and the like, I did not make a lot but I was honest and when I could no longer support myself and remain honest I closed the business and became employed again.
When I refinanced my home in Portland the second time I was told by the company I refinanced it threw that they would take out my property taxes each month and create an escrow acct. That loan was purchased by Countrywide. As I was self-employed I had to get a “stated income” loan which was a 5 yr Arm. They did not include the property tax escrow acct. and before I knew it I owed I believe $10k in property taxes. In 2006 knowing the 5 yr Arm was going to go up and being informed I owed the State of Oregon a fairly large sum, also feeling I needed to get into a fixed rate I again refinanced it with Countrywide. They charged me nearly $20,000. In “fees” and put I in a 7.6% fixed rate. Again they setup the escrow acct. and insisted I sign a 3 yr. “prepayment” agreement so I would not refi again without taking a 5% hit.
Countrywide never paid the property taxes instead transferred funds from the escrow acct. into an insurance policy after Safeco my Homeowners insurance of over 20 yrs. canceled my policy on my home in Portland for 3 claims. Note; the three claims were 1 theft and two storm damage claims to my cabin in Otis one storm put a tree threw the roof and in 30 days caused the cabin to be uninhabitable due to mold. Which they denied the mold as an issue.
Countrywide kept contacting me in 2007-2008 wanting me again to refi my home as it was appraised at over 300k and I only owed 180k on it. I politely refused.
Since Countrywide never paid the property taxes I knew in August of 2008 that my house payments were going to increase from $1400. a month to $2500 a month and as I work for a great company “Pitney Bowes” I only make $38k a year. And knew I was not going to be able to get a 2nd job to pay the increase so I put my home up for sale and planned on moving to the now moldy beach cabin while it sells. Once it sells I was going to use the proceeds to put down on a 150k or less piece of property away from the city as I felt and still feel that the economy and society will deteriorate and I have a burning desire to go “off-grid” and become self sufficient before that happens.
I had hoped to get 50k out of the home and perhaps use my Federal VA benefits to purchase and create a small farm and build a straw-bale house. I was lucky and found a buyer. My 3 yr “prepayment” penalty was going to lapse in June of 2009 so I petitioned Countrywide to void it as I did have a buyer but at a greatly reduced sale price. They agreed after much documentation and hours on the telephone with dozens of people.
However it never happened….
I put my home of 30 yrs up for sale as I knew I could not keep it going and I have approx. 10k in credit cards with interests now at near 30%. It was time for me to pack up and get out of town before things got worse.
In the early 90’s we purchased a small cabin in Otis that I had hoped someday to retire to as I had no savings, no investments, no rich Uncles, and no retirement plan.

I would like to thank you all.
I now live in my small 1 bedroom cabin (That was paid off in the mid 1990s) with my wife and two cats, in the wettest place in Oregon, 2 air purifiers running 24/7 a dehumidifier running 24/7 on a small lot with no sunshine, no place to grow a garden, one room has no ceiling, floor or walls, the bedroom has a warped wood floor and 4 holes in the ceiling, There are huge gaps under the doors and walls but as there is no foundation there is little I can do. The septic system has nearly failed, Our main source of heat is a very small wood stove, My wife’s asthma has gotten much, much worse as we live near the Pacific Coast and the outside air is way to damp for her.
She is unable to find a job as a transcriptionist due to the economy; I drive 100 miles one way to my assigned territory in Eugene from Otis, My normal day starts at 7 in the morning and ends oft times after 9 in the evening, giving me no time for repairs, The floor in ¾ of the home is unsafe; The front porch will collapse any time, most of this cabin needs to be torn down. The dry rot is so bad there is no support in one corner of our bedroom. The roof is tarped and most of the leaks are slowed. Our belongings are in two storage units I pay rent on. I had a stroke 2 yrs ago and finely accepted the assistance of the VA and have been declared by social security to be disabled. I am still employed and just received a 30 cent raise this year (heck I should go out and celebrate).

Due to all the mold we are fighting to keep at bay my own health has suffered. How my wife can put up with this environment I do not know. I do know that she will stick by me and pray that we find our small modest farm soon, but it is very hard on her so we pray the home in Portland closes soon so we can find that small farm in Eugene.

My home in Portland went threw closing on Monday of this week.
After 30 yrs I will be receiving a check in the amount of $100.40

Gee do you think I can use that for a Down payment.

Phillip Moulton

Anonymous said...

i virginia Henry and Latasha Goins please call 585-235-4566 we have a real mess with 2 properties at 5-11 appleton street Rochester new york 14611 and 46-48 Augustine street Rochester new york 14613 property was sold 4-22-08 sold and tranferred fro mark Lovewell in Calif. now Countrywide for months REFUSED to accept any payoff or short sale offer for almost a year now. last week i got a letter in 5 days auction date sale i have a pre approval for months now waiting for an approval amount from country we NEED HELP TO keep our properties after REHAB on both abandon ,distree properties were appraised at 63,000 countrywide would not accept first offer 63k,so then we offered 90k on each...they will not coroprate....we still owe contractors or we will remove all our money, and then it will be worth nothing.... we are trying Everthing i even went to the nys Attorney General office....and HUD,..

Anonymous said...

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