Following a deal last summer in which Bank of America provided $2 billion in financing to reeling mortgage lender Countrywide Financial (in exchange for 16% percent of the company), the consumer banking giant announced that it would acquire the company for $4 billion in an all-stock transaction.
This is a good opportunity for BofA to expand its home loan business at fire sale prices, but the move is largely an effort to protect its earlier investment, as rising delinquencies and foreclosures on its mortgage loans fed speculation that Countrywide was planning to file for
bankruptcy.
Four billion is a lot of money, and there's no telling when Countrywide will hit bottom with the problems in its subprime loan portfolio. If a bank wants to add to grow its mortgage business, they should just advertise on HotPads. Our affluent and educated audience shopping for homes for sale would be perfect home loan customers, and pay their bill on time.
And the market just continues to get uglier. This to me emphasizes the importance of those real estate professionals left standing to deliver good, quality service. Even with the downfall of Countrywide, I can think of at least 3 ways to help get your buyer qualified. Can you?
Posted by: Tim Harris | Monday, January 14, 2008 at 10:17 AM
4 billion is quite a bit of money but is definitely a deal for Bank of America. The way I look at it is…if countrywide is selling for only 4 billion there are still many more foreclosures to come. 2008 will be a defining year for the real estate market nation wide. Some think the market will stabilize, some think is till continue to go down…only time will tell.
Posted by: Sell My House | Tuesday, January 29, 2008 at 01:08 PM