Apr 30, 2017

Bank of America Agrees to Purchase Countrywide Financial Corp

Published Jan 11, 2008, 11:31am


Email:

To instant news updates in your email.

Never miss a story!

Advertise on this site



News brought to you by:
InfoKwik Web Design, Marketing & Hosting Kansas City

Bank of America Agrees to Purchase Countrywide Financial Corp


Creates Largest U.S. Mortgage Lender and Servicer


Bank of America Corporation today announced a definitive agreement to purchase Countrywide Financial Corp. in an all-stock transaction worth approximately $4 billion.


The purchase will make Bank of America the nation's largest mortgage lender and loan servicer. This is an important advancement in the company's desire to help customers and clients meet all of their financial needs. A mortgage is one of the key foundations of many customer relationships.


Countrywide will benefit from the stability of being part of the largest and one of the most financially strong financial institutions in the United States.


Bank of America will benefit from Countrywide's broader mortgage capabilities, including its extensive retail, wholesale and correspondent distribution networks. The Calabasas, California-based company operates more than 1,000 field offices and has a sales force of nearly 15,000. Countrywide also has a leading mortgage technology platform, a well known brand in home lending and management expertise in a number of key areas.


Bank of America would gain greater scale in originating and servicing mortgages in the U.S. Countrywide had $408 billion in mortgage originations in 2007 and has a servicing portfolio of about $1.5 trillion with 9 million loans. The purchase also includes Countrywide's Lender Placed insurance and other businesses.

"Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation's premier lender to consumers," Bank of America Chairman and Chief Executive Officer Kenneth D. Lewis said. "Countrywide customers will gain access to a broad set of consumer products including credit cards and deposit services. Home ownership is a fundamental pillar of the U.S. economy and over time it will be a key area of growth for Bank of America."


"We are aware of the issues within the housing and mortgage industries," Lewis continued. "The transaction reflects those challenges. Mortgages will continue to be an important relationship product, and we now will have an opportunity to better serve our customers and to enhance future profitability."

Countrywide's deep retail distribution will enhance Bank of America's network of more than 6,100 banking centers throughout the U.S. After closing, Bank of America plans to operate Countrywide separately under the Countrywide brand with integration occurring no sooner than 2009.


"We believe this is the right decision for our shareholders, customers and employees," said Countrywide Chairman and Chief Executive Officer Angelo R. Mozilo. "Bank of America is one of the largest financial institutions in the U.S. and internationally, and we are confident that the combination of Countrywide and Bank of America will create one of the most powerful mortgage franchises in the world. We have had a long and positive relationship with Bank of America and our servicing and origination businesses, as well as other aspects of our operations, will be substantially enhanced as a result of this transaction."


Financial Terms


Under the terms of the agreement, shareholders of Countrywide would receive .1822 of a share of Bank of America stock in exchange for each share of Countrywide.


The purchase is expected to close in the third quarter and to be neutral to Bank of America earnings per share in 2008 and accretive in 2009, excluding merger and restructuring costs.


Bank of America expects $670 million in after-tax cost savings in the transaction, or 11 percent of the expense base of the two companies' mortgage operations. About one third of those savings would come in 2009, two thirds would be realized in 2010 and savings would be fully realized in 2011.


The agreement has been approved by Bank of America's board of directors and Countrywide's board of directors and is subject to approval by Countrywide's shareholders and customary regulatory approvals.

Subprime Initiatives


Origination of subprime loans is not planned for the combined company. Both companies share the goal of keeping distressed mortgage borrowers in their homes when possible. Both Bank of America and Countrywide continue to work with public officials and community groups to explore new initiatives to help homebuyers and communities affected by the subprime issue.


   - Bank of America and Countrywide both support efforts to fight predatory
     lending practices.

   - Bank of America and Countrywide are active participants in the Hope Now
     Alliance, which has launched a letter campaign to delinquent borrowers,
     created a counseling hotline and facilitates the sharing of best
     servicing practices. Bank of America also will continue Countrywide's
     commitment to participate in the American Securitization Forum's
     December 2007 reset freeze framework for 2/28 and 3/27 adjustable rate
     mortgages (ARMs).

   - Bank of America will continue Countrywide's commitment to participate
     in California Governor Arnold Schwarzenegger's November 2007 subprime
     ARM program.


Bank of America plans to expand the capacity and marketing of credit counseling programs and internal capacity and flexibility for loan modifications for loan workout teams following the purchase of Countrywide.


Countrywide also has a number of programs in place designed to minimize foreclosures where feasible.


   - On October 23, 2007, Countrywide announced a major expansion of its
     foreclosure prevention efforts by starting a $16 billion home
     preservation program to assist as many as 82,000 subprime hybrid ARM
     customers facing ARM resets through the end of 2008.

   - On October 24, 2007, Countrywide entered into a groundbreaking
     partnership with the Neighborhood Assistance Corporation of America
     (NACA) to leverage Countrywide's market leading home retention programs
     and NACA's unique model for counseling borrowers.

   - On December 21, 2007, Countrywide announced work on an agreement with
     the Association of Community Organizations for Reform Now (ACORN) to
     serve as a blueprint for home retention and foreclosure prevention
     initiatives in the mortgage industry, with a particular focus on
     subprime borrowers.

Advertise on this site



AddThis Feed Button

Email:

To instant news updates in your email.

Never miss a story!

Tags: bank of america, home mortgage

Add a Comment

Please be civil.

(Use Markdown for formatting.)

This question helps prevent spam:

Browse more...

Business

Announcement

Find a Job
Keywords:
Location:
Job category:

Search This Site
Search this site or any KC Web Guide

Got Feedback?
Send a letter to the editor.

Subscribe
Sign up for the Free E-Newsletter.
Also receive updates automatically in your email.

Advertise
Promote your brand at KCWebGuides.com.

The Constitution...

"The Constitution...is a mere thing of wax in the hands of the judiciary which they may twist and shape into any form they please."

--Thomas Jefferson

More Quotes

Subscribe