The nations largest mortgage company was bought by Bank of America at a near historic low stock price, here is why:

The mortgage fall out claimed its biggest catch this week with Countrywide the largest mortgage company in the country agreeing to be acquired by Bank of America. So what forced Countrywide to sell? The problems for Countrywide have been well documented in the media. They carry the largest servicing portfolio of mortgage loans and have been hurt gravely due to the delinquencies and foreclosures. Their level of foreclosures climbed over 7% for the month of December and there was growing speculation that they would be forced to file for bankruptcy protection. In August of this year Bank of America invested two billion dollars into Countrywide in exchange for up to a twenty percent equity stake in the company. As Countrywide's value has fallen, Bank of America's large investment has also deteriorated. The credit markets have not recovered to allow Countrywide to continue to sell loans on the open marketplace and this has limited what loans Countrywide has been able to offer. While the union has been speculated for a number of years, no one would have predicted the circumstances that unfolded in the past few months that allowed a company whose market cap was in excess of fifteen billion dollars to be acquired for four billion in less than one year . © LowRateMortgage.com 1-12-2008

 

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