The Future of Countrywide

In the mid 1980s, I entered the mortgage banking industry at a company that some will remember: Rainier Mortgage, a division of Rainier Bank.  As banking deregulation opened up opportunities for large out of state banks, Rainier sold their mortgage operations to Goldome.  I was the youngest mortgage loan underwriter in an office full of 25 women. Imagine an office where every person chain smoked all day and the windows in the office didn’t open. As the last hired underwriter into the lion’s den, I knew I would be one of the first to be laid off when merger rumors started to fly, so I asked for a transfer to the loss mitigation department instead of taking the layoff.  The Foreclosure division was booming at that time and I learned a whole lot about human nature during my time there.  My innocence about the goodness of people was shattered; it’s shocking what people will do to a home when they are having that home taken away from them.

As the Goldome purchase of Rainier Mortgage continued to unfold, many, many people were laid off and Goldome eventually closed their offices here locally.  Some of my former colleagues are still in the mortgage business at various companies. They’re underwriters, loan officers, company owners, branch managers, and executives.

The proposed Bank of America buyout is a pretty low figure, 6 billion, considering Countrywide’s servicing portfolio, even with delinquent loans, is estimated to be 1.48 trillion.  This means that employee stock purchases will probably amount to zero.  Federally chartered banks have traditionally come in and out of mortgage lending in a cyclical way.  Most suit-and-tie bankers at the executive level do not understand what it means to go out into a community and walk into a real estate office and form relationships with Realtors.  Instead, the mortgage banking division’s employees are handed leads on a daily basis from the bank branches. 

BOA employees originate mortgage loans at the retail level from the banking branches with call centers taking loan apps. Recall that BOA closed their wholesale lending unit.  Knowing this, Countrywide employees will have a couple of options.  They may be asked to re-apply for their job (WaMu is famous for making all employees do this during every merger), relocate to a BOA mortgage banking center, or perhaps if Countrywide is better established at a more desirable commercial retail location, the branch will be left open, for now.

The fact that we are in a national housing recession is beyond debate.  Many economists are now saying we have already entered an economic recession, which makes Eleua’s wild predictions from earlier seem eerily prescient. If retail mortgage originations are expected to decline, then it would be safe to assume that those crunching the numbers would figure out how many people are needed at each position and then layoff double what is needed since reducing labor is a fast way to reduce expenses.

The other problem that is difficult to quantify yet easy to foresee is corporate culture.  BOA is purchasing a company where loan originators are paid in a radically different way than how banks pay their loan officers. Differences in pay structure, norms, hierarchy, beliefs, rules, shared power, openness of tolerance for each other’s corporate culture, and systems of motivating and rewarding employee behavior will lead to political clashes of will.  With company mergers, politics will lead decisions on who to keep and who to let go, and that doesn’t always mean that the top producing branch managers and loan officers will be kept. 

But who’s to say that the buyout will even go through?

[photopress:BOACW1.jpg,thumb,alignleft]BOA has some time now to look through all the books. The real value is in Countrywide’s servicing portfolio.  Perhaps that can be purchased instead.  Many, many companies during the last 10 months have first tried selling the company whole and many of those purchases did not go through.  If I held CWide stock (which I do not) I would want to know why shareholders would approve a sale price of 1 billion if the servicing portfolio was worth 1.48 trillion.

[photopress:BOACW2_1.jpg,thumb,alignleft]If I held BOA stock, (which I do not) I would want to know why BOA sees Countrywide as a good investment when most of their money was made during the real estate run-up, originating loans that investors do not want to purchase anymore. Why base the value of Countrywide on what they have been able to accomplish in the past 7 years?

[photopress:BOACW3_1.jpg,thumb,alignleft]This buyout offer could be a way for BOA to really get a better feel for all the possible positive and negative consequences of a purchase, both short term and long term.  Wouldn’t it make more sense for BOA to let Countrywide go into bankruptcy and then pick off the servicing portfolio at that time?  Any superstar branch managers and LOs will naturally be looking for work and then existing BOA managers can interview Countrywide people ahead of time for a good culture match. 

Then there are the billions in tax breaks that BOA gains from purchasing Countrwide, just like when they purchased First Republic Bank of Dallas in 1988, and I suppose cross-selling banking services and credit cards to that servicing portfolio would net some income, yet also adds expenses. Yes, Countrywide is capable of originating a billion each year in new retail originations, however, during that time, we experienced extremely lax underwriting standards. Many of those loans were originated by mortgage brokers through CWide’s wholesale channels.  There are few buyers on the secondary market now for anything other than conforming loans. The days of subprime broker originations and lax underwriting are gone and Realtors, builders, and consumers are surprisingly not loyal when returning for business, which is why a sales/service mentality is so important in mortgage lending.  Realtors, builders and consumers tend to like really good service, fast service, low rates AND low fees, all in one place, which is excruciatingly hard to do at a massive corporate bank, which is why hundreds of thousands of mortgage bankers left banking in the early 1990s and opened mortgage brokerage firms.

If BOA is buying 1.48 trillion for 6 billion, (they already put 2 billion into CWide so their latest bid is 4bil) perhaps this is a good investment after all, for BOA that is.  But not for the 50,000 Countrywide retail and wholesale employees. Matthew at blownmortgage reminds us why BOA closed their wholesale lending division, which does not bode well for Countrywide wholesale employees.  Take off the rubber wrist bands and start polishing your resumes and networking skills (like I suggested in August), before the WaMu retail employees land all the decent-paying jobs first.

Next up for discussion of course is the future of Washington Mutual.  Who would have known one year ago that we’d be talking about Countrywide and Wamu today?  Well, perhaps Angelo Mozillo and the CWide executives knew. Take a look at their stock sales.

178 thoughts on “The Future of Countrywide

  1. Jillayne, unrelated to this, but why don’t lenders take the position that the commission rebate checks to buyers from some buyer agents is a concession against purchase price? They would if the seller gave them a check after closing, so why not this?

  2. Hi Leanne,

    Commission rebate checks to buyers from some buyers agents have been cleared by HUD/RESPA. Attorney generals in states have taken a look at seller concessions and as long as they are disclosed to all parties, they are fine.

  3. Pingback: Portland Oregon Real Estate Agent Blog » Week Links - January 11, 2008

  4. Well, there’s a lot to be said on this subject, and a lot will be said, in the coming year. Thanks for getting it started!

    I think it is a fair assumption that BOA got to take a pretty hard look at the CW books when they lent them the 1st $2 billion: that kind of money buys that privilege. At that point, they probably realized at some price, CW would be a bargain, no matter what the pending liabilities. BOA may have even helped push the media buttons to further erode the price to a level they knew would be profitable.

    I don’t think there were a lot of other buyers who could pull this off (a foriegn company or Buffet?), which helped drive the price down even further. If you are the only buyer, (and you had no interest in retaining the brand name) why wouldn’t you push for a bargain?

    That the fat cats got out with most of their money should surprise no one. Didn’t the same thing happen at Enron, Worldcomm, US West, etc. ad nauseum?

    Secondly, Jillayne, you mention

    “Many of those loans were originated by mortgage brokers through CWide’s wholesale channels.”

    This is true, but many more were originated via CW’s subprime retail arm, Full Spectrum Lending, which was going great guns until August of 2007. At least for a time there, they were among the largest originators of subprime loans.

    Which caused them more grief, wholesale or retail channel, or the subprime loans that were NOT originated in either channel (purchased from other lenders), we may never know, but I cannot simply allow the contention that the wholesale side of this business caused this mess, until I see an independent study that proves it.

    I realize, it is the popular story, and conventional wisdom, and still may be true, but I have lived long enough to see both turned upside down.

    It is equally reasonable to believe that the retail side of subprime was equally complicit in the problem that has unfolded (see also Ameriquest, Beneficial, etc.). I would be happy to read someone’s detailed study on the matter, but I suppose by the time it comes out, the victims will all be dead, and no one will care.

    And lastly, I do not think that wholesale lending is dead, as blown mortgage has opined. Wounded by the media, politicians, and their erstwhile lending partners, definitely, but not out for the count. It will bounce back when the bell rings and come out swinging for the next round!

    Wholesale lendeing and mortgage brokers provide too much value to borrowers and banks alike to simply cede the match.

  5. Hi Roger,

    “but many more were originated via CW’s subprime retail arm, Full Spectrum”

    Good point!

    I picked this up from the WSJ tonight:

    “Terms of the deal call for Bank of America, the largest U.S. bank by market value, to give 0.1822 shares of Bank of America for each share of Countrywide. The deal could be renegotiated if Countrywide experiences a material change that adversely affects its business, but Mr. Lewis said he does not anticipate that happening. The deal is expected to close in the third quarter. Countrywide declined to discuss the deal.

    Bank of America is buying a deeply troubled company, and it faces the risk that Countrywide’s assets could continue deteriorating.”

    “BofA says it will be more selective about acquiring mortgages issued by other banks or arranged by independent brokers, traditionally a large part of Countrywide’s business. “Obviously, they had made some mistakes,” Mr. Lewis said. “But the people who operated the business on a day-to-day basis did not make those decisions and they are very, very good at what they do.”

    What does that say about the future of Countrywide wholesale?

  6. I believe Mr. Lewis suggested BOA may add Countrywide kiosks to their bank branches. It will be interesting to see if they keep the name if its associated as being one of the big daddy’s in the mortgage melt down. In fact, it could be said they are the “prime poster child”.

  7. Jillayne,

    Maybe it is just me, but this has the feel of a mob boss taking out one of his own don’s when they go bad as to preserve the better of the family.

    It may have been in BoA’s best interest to clean up the mess as to save further losses for all the financial stocks. When you are looking at the top 20 banks taking 20 to 40 percent hits in stock value over the course of less then 18 months some body has to stop the hemorrhage. How may U.S. Banks need to be made targets for out of country money?

    Sure this is a great deal for BoA. They also have investors of their own, some of which are insurance entities and some of them even have their hand in the PMI providers. Plus it takes a major competitor out if you are a bank. One of the best ways to remove competition is by buyouts.

    I would almost guess that you will see a ton of rewrites to clean up the bad deals in the CFC package. It could mean a new round of payroll for the BoA side of the table and carry the bank for the next two years or so just in production efficiency. A machine runs better while running volume.

    You may see the CFC name just go away all together – out of sight out of mind.

    If I was BoA I would be very concerned with the outside risk I am buying in the likes of legal liabilities. Looks like it might be one of those deals were they just buy the assists (old lender joke).

    One thing is for sure and that is that it will make for something interesting to watch. Thanks for the great bit!

  8. Hi Rhonda,

    Or the subprime poster child? Like Roger said, we would need to see a breakdown of their originations. Perhaps that will be forthcoming.

    I’m sure BOA will keep the Cwide name only until it no longer serves them and then everything will be renamed BOA. 2009, 2010 at the latest.

  9. Very informative and exceptionally well-written post, Jillayne. You should receive a stipend for propping up the otherwise sketchy credibility of this blog.

    Otherwise, I might’ve actually believed that everything was going to be just fine with CFC:

    Back then, less than 5 months ago, ‘some’ were advocating buying CFC on the “dip” into the 20’s. Being long CFC back then seemed practically suicidal.
    CFC seems to have closed at just over 6 today.

    Not to worry, though, the sky is not falling.


    Chik N. Littel

  10. Jillayne, I think the answer to your question would be far too individualized for a general response and that it is too early, especially for outsiders, to provide much practical advice. Just about any merger will create the loss of jobs due to redundancy and reorganization, and that harsh reality needs to be fully appreciated. I would imagine that unless they area awash in denial current CFC employees have been somewhat wary about their company’s prospects over the past several months and have hopefully started thinking about plan B. That perspective should likely not change with the BOA purchase. For those who are not particularly satisfied with their current career track, this may represent a hidden opportunity to move on. For the others, I think that denial is the worst possible approach but that cautious optimism may be the order of the day (with discreet contingency planning). Any company has employees that are considered more valuable than others. They may recognize who they are and should be relatively protected, but it is impossible to know with any certainty who these employees might be when the future course of this merger is so unpredictable. The most valuable and productive of CFC employees under the previous paradigm may have no role in the new BOA-dictated era, and vice-versa for all we know. Does anyone really have a clue re: BOA’s intentions this early in the game? Throwing in the towel is not likely to be warranted at this point but I’m sure these are nervous times.

  11. Interesting thought on the prospects of other bidders, seeing perhaps a bargain. But in addition to the size issue you mention, I think the prior investment of BOA makes that somewhat less likely (but not impossible).

    When did BOA close their wholesale unit relative to the investment in Countrywide?

  12. Back in the mid 80’s, banks were merging all the time. Mellon took over the Bank where I worked. My sister Nikki went through so many mergers, we couldn’t figure out where she worked half the time.

    I remember when Continental where she worked took over Lincoln Bank it was her job to walk in and say: “All Lincoln employees stand up. Now all Continental employees sit down. Take everything in your desk that says Lincoln Bank out and throw it away.”

    As czb says, there’s no accurate level of prediction. Usually they have every area cut one person, as they know that will cut out the rot. That also creates the fear needed to reduce the numbers by accelerated attrition. Then they start moving out the duplication of position, as they eliminate entire departments because they don’t need two of the same thing. The last stage affects the higher ups more than the worker bees.

    Still, though we lived through major mergers, neither my sister nor I were ever affected by the drastic cuts. She is still in Banking and never fired anywhere for over thirty years. I stayed almost 20 years before switching to real estate in 1990.

    As I recall, the people who were most afraid were the ones affected. Those like my sister and I who weren’t afraid for our jobs, remained unaffected. Maybe it becomes a self-fulfilling property as fear cuts into one’s production. Interesting thought. Kind of like the person who fears the dog the most, is the one most likely to get bit.

  13. My daughters both work for CW, and the local CW branch manager is a close friend.
    Word, internally, is that B of A will allow CW to retain its name and operate as it has in the past.
    I doubt this.
    One of my daughters is a processor and they have already cut I would hate to be a competitor of B of A after they swallow CW.that department in half, and I can’t believe that B of A will continue to have in-branch processing when they can consolidate it into a centralized processing “center”.
    There goes local processing, funding, and responsive service.
    And, I think there will be a HUGE culture clash as CW is forced to conform to stodgy big-bank policies and procedures.
    It was a bailout for CW, likely orchestrated by The Fed to avoid having to face a calamity of epic proportions if CW had failed.
    How can anyone compete with a behemoth of that size with that much capital behind them?
    I guess the only answer to that might be to compete on responsive service?
    Next up?
    WAMU will be acquired by someone within the next 30 days.

  14. “Word, internally, is that B of A will allow CW to retain its name and operate as it has in the past.”

    Every buyout or merger I have ever been a part of has had this statement made in the early days… wait a year… it will look blatantly disingenuous.

    I pulled all MY accounts out of BofA when they bought MBNA and I saw how poorly they treated their existing customers that had MBNA accounts.

  15. “Word, internally, is that B of A will allow CW to retain its name and operate as it has in the past”

    Truth is is consumers are afraid of the word “Countrywide”, and many are. If Agents are afraid of the word “Countrywide” and many are. They will do what they need to do. It’s a business. Who cares what the name is on the top fo the building or letterhead?


  16. Hi Frank,

    I agree: A year is a good marker. During a merger, the employees at the company being acquired are always told whatever they need to be told to keep them productive and to keep business coming in the doors from their existing customers: “Nothing will change except your benefits package will be better!”

    BOA will be under pressure to start returning a profit on the purchase by the end of 2010 so we could watch for department and branch consolidations begining in 2009 with the name change taking place during 2010.

    There is no reason to keep the name longer than that when the corporation has a chance to build the BOA brand. With all the media publicity surrounding Mozillo, including the forthcoming news about his golden parachute package, the protest rallies at their branches, the employee rubber bracelet oath, the stories from homeowners who have been trying to get loan modifications, BOA is better off. They have most likely ordered the BOA signs for the braches they have already decided to keep.

  17. Hi Phil,

    One of my mentors, Iva Deobold, works at a Countrywide in Eagle, ID. If you ever run into her, please give her a big hug for me!

    In terms of your daughter and processing, banks have gone back and forth when it comes to centralizing processing v. putting processing (and underwriting) back at the branch level. They try it one way, then there are problems so the go back to doing it the other way.

    Bank customers like Realtors, builders, and consumers like having their mortgage people right there in the community but a corporation always believes it can save money by centralizing everything.

    Of course, then the bank loses mortgage customers so then they go back to the populating the branches. It would be a safe bet to assume that BOA will go back and forth as well. Hopefully the centralized location will not be too far of a commute for your daughter.

  18. BOA ended their wholesale ops EOY 2007. I appeared to be an orderly withdrawal from the wholesale channel (declare victory, then go home!).

    It’s reasonable to say that every business and every employee involved in the financial business in the past 5 yrs bears some responsibility (and credit, where it is due) for the current predicament we are in, but the interesting part of the aftermath is who survives, who fails, and who is apportioned the blame.

    The survivors with the largest PR budget will largely determine who is apportioned the blame. Looks like BOA gets to write that chapter, but we tiny dissidents can continue to speak truth to power.

    In my experience, BOA was not a big player in wholesale, not generally having the most the most competitive or most innovative products. They always seemed more focused on their retail strategy, which I think on the whole they have been successful. I think they elected a strategy to separate themselves from the blame.

    Although it seems hard to believe, there are already competitors that are expanding in the wholesale channel, seeing an opportunity as others exit.

    Keep your heads up folks, this is not the end!

  19. Hi Ardell,

    I remember:
    Lincoln S&L
    Pacific First Federal
    People’s Bank

    You’re right. As long as the employees are able to retain their jobs at BOA or are able to pick up work at another institution, the bills get paid and life goes on. 🙂

  20. Apella says in comment 7:

    “Maybe it is just me, but this has the feel of a mob boss taking out one of his own don’s when they go bad as to preserve the better of the family.”

    I was bouncing my 4 month old niece on my knee while watching The Godfather on Christmas Eve when my sister came in and I got into BIG TROUBLE. Hey, I was introducing her to a young Marlon Brando!

    You know, I never would have thought of it that way. Maybe it’s because I live on the west coast and you’re in Michigan.

    Also, I believe BOA is buying the assets as well as CWide’s liabilities.

  21. I am not sending loans to Countrywide and really didn’t use them much anyhow before this mess. They’re not one of my preferred lenders to work with.

    I agree with ARDELL, when client asks me “where did you lock my loan” and if I were to say a bank in the press like Countrywide or WaMU…I believe it would cause my borrower concern.

  22. Here’s a good, and brief examination of the takeover.

    Implode o meter seems to be a good site for gathering some info, but their bias is definitely negative, on just about everything.

    There seems to be a battle of the blogs re positive and negative views of the past, present and future of the overall housing and financial markets.

    I have a 13 yr old son that enjoys finding humor on the internet, and I generally enjoy what he shares with me (at least my inner 13 year old does!). The humor tends to snarkiness, as most humor does, pointing out the negatives in human behavior. Perhaps I trust him too much, but so far my trust has been amply rewarded.

    I cautioned him to balance out the snarky viewpoints with something more affirming. He mentioned he goes to Wikipedia, which I pointed out is intended to take a balanced/neutral viewpoint.

    What I had in mind for my son is affirming messages and information. Not of the “everything is rosy” kind, which clearly ignores the troubles that exist, but the “things can get better” kind, if we apply the proper amount of focus on the positive.

    I suspect that RE agents are generally of this frame of mind. It takes all kinds to keep on keepin’ on! Keep everything in perspective and balance, and do everything you can do to make it a better tomorrow.

    So, don’t let the nay-seers take over the talking points, but keep them in the mix! Some of their predictions will turn out to be correct, and you just might benefit from the warning.

  23. Re Rhonda’s post

    I have not sent a loan to CW in while either, as I haven’t seen the benefits as sufficient.

    That said, I would not hesitate for a moment to send a loan to CW, WAMU or any other lender, provided the benefits (costs, rate, program or other less tangible benefits) outweighed the risks.

    The risks of sending a loan to BOA or National City while they were shutting down wholesale were VERY small. The risks of sending a loan to CW today, which has NOT announced a shutdown is even smaller. There is some element of risk in sending a loan to ANY lender.

    If a lender has a program that saved my borrower thousands, I would certainly make that one of my recommendations, while explaining the risks and benefits.

    I agree that managing clients perception of risks, which are often wildly out of porportion with my understanding of risks, can be challenging. Sometimes, I just have accept that their perception of risk supercedes my perception, but I feel duty bound to at least try to present my assessment of risks and benefits.

  24. Ardell wrote: Hi Kary,

    BOA announced the closing of their wholesale lending division on Oct 25, 2007.”

    And being lazy I’ll ask when did they invest 2 Billion in CW? I’m just wondering if they did one, contemplating starting it back up through CW? Or stated differently, that they contemplated buying CW back then.

    If I were BOA, I’d dump the CW name immediately. Perhaps it’s due to my bankruptcy background, but I never really did consider the CW name to have any goodwill associated with it.

  25. I have lenders I who are easier and less hassle to work with that provide the same rates. Often times, the lenders are priced so closely that it’s not worth the difference to deal with ones who are more trouble with their guidelines or how they may be on the back end.

    If a lender has a special program then of course I recommend that to my clients. If we’re talking vanilla loans and the difference is small…forget it!

  26. Kary

    BOA propped up CW w/ $2B in August when the liquidity crisis really heated up.

    There had been serious rumors and speculation long before the crunch that BOA was looking to absorb CW, for their impressive ability to originate a great number of loans.

    Rhonda: I agree. You and I would possibly assess the risks and benefits differently, based on our experiences, but ultimately, I believe we would both pick the lender that provides the best benefits, at an acceptable level of risk for our clients.

  27. Hi Roger,

    Well maybe the news all seems like a downer because we are in a down cycle, which balances out all the up! up! up! news we’ve had about buying a home or refinancing RIGHT NOW for the past 7 to 9 years.

    When Countrywide cut off employee access to from company computers, a couple of months ago, the censorship move seemed somewhat controlling.

    Continuing on with the Countrywide dialogue, I found this story dated January 2007 which shows that the BOA/CWide takeover rumors have been going on for a year now.

  28. What do I care about Countrywide employees job security? Answer is , I don’t. Those employees work in a corrupt, uberdishonest organization that has all but killed thousands of borrowers through their greed and avarice.

  29. Two words of advice for Bank of America regarding Countrywide Toxic Mortgage: Due Diligence.

    Also make sure your folks use disinfectant after shaking hands with The Orange One.

    Seriously though, it should be painfully obvious to the B0fA auditors that the “assets” on CFC’s books are worth nowhere near what Countrywide says they are.

    They made loans to liars. They called them “liar’s loans”. They ain’t getting paid back. And Countrywide if left alone would simply go bankrupt.

    Why BofA would want to pay more than $1 for CFC is beyond me. And I doubt they, or anybody else, will.

    BofA – haven’t you already lost enough on your stupid and reckless Countrywide mistake already? You blazing idiots – we told you a few months ago you were going to get the CFC VD if you took Angelo home for the night and you went ahead and did it. And now you’re looking to marry him? Man, some guys are hopeless. Unless there’s a shotgun involved, this marriage makes no sense. Sounds like a classic pump and dump to me!

    NEW YORK, Jan 10 (Reuters) – Bank of America Corp is in advanced talks to buy struggling Countrywide Financial Corp, the largest U.S. mortgage lender, several people familiar with the matter said on Thursday.

    Angelo Mozilo, its co-founder and chief executive, has been a lightning rod for critics who say he encouraged loose lending practices that contributed heavily to the housing crisis.

    Mozilo has also been faulted for collecting hundreds of millions of dollars in compensation this decade from pay, bonuses, awards and stock options, including millions of dollars after it was clear the housing crisis had begun. In July, he called the slump the worst since the Great Depression.


    It should be obvious by now that Countrywide Toxic Mortgage’s Board of Directors is not only incompetent, but they’re corrupt as well.

    Mozilo obviously stacked the board with his cronies so that he and his buddies could personally enrich themselves by OVER $800 MILLION at the expense of the CFC shareholders and employees.

    Most sickening of all is that he hilariously had the Board authorize repurchasing $2 billion in Countrywide shares on the open market this past year even as he dumped ’em fast and furious. HE SOLD THEM AT THE INFLATED PRICE AND THEY BOUGHT THEM. AND THAT’S WRONG.

    Mozilo has run Countrywide into the ground, it’s stock has dropped 90%, they’re on their way to bankruptcy, they participated in illegal activity, thousands will lose their jobs, screwed shareholders are suing the company, Mozilo is under SEC investigation, and criminal charges against Mozilo are likely around the corner. AND YET THE BOARD STILL DOES NOTHING AND MOZILO CONTINUES TO CALL THE SHOTS.

    Want to know what’s wrong with American business today? Just look to Countrywide and its current and former board members. And when the charges come down on Countrywide, and the frog marches start, they should start with the Board of Directors.

    Angelo R. Mozilo
    Chairman and Chief Executive Officer
    Countrywide Financial Corporation
    Chairman Countrywide Bank, FSB

    Jeffrey M. Cunningham
    Chairman & Chief Executive Officer
    NewsMarkets LLC

    Robert J. Donato
    Retired Executive Vice President, Los Angeles Branch
    UBS Financial Services, Inc.

    Martin R. Melone
    Retired Partner
    Ernst & Young LLP

    Robert T. Parry
    Retired President and Chief Executive Officer
    Federal Reserve Bank of San Francisco

    Oscar P. Robertson
    President and Chief Executive Officer
    Oscar Robertson Solutions LLC

    Keith P. Russell
    President and Chief Executive Officer
    Russell Financial, Inc.

    David Sambol
    President and Chief Operating Officer
    Countrywide Financial Corporation
    President and CEO Countrywide Bank, FSB

    Harley W. Snyder
    HSC, Inc.

  31. Jillayne:

    Interesting article.

    The merger was going to face govt opposition then. Probably has the green light now.

    Further concentration of banking is not necessarily good news for consumers.

  32. “If BOA is buying 1.48 trillion for 6 billion, (they already put 2 billion into CWide so their latest bid is 4bil) perhaps this is a good investment after all, for BOA that is.”

    This could be misleading to some. The 1.48 Trillion is just the nominal value of the loans that CFC has the servicing rights to. CFC does not own all of these loans. Additionally, the loans that CFC does own, are not owned outright, they are posted as collateral for more loans.

    You can compare this to regular households: Let’s say ‘Sam’ ‘owns’ a house worth $200k, but has a mortgage for $199k. This does not mean that Sam has a net worth of $200k, but rather $1k. And it’s actually worse than that, because there are costs involved in liquidating the asset ($12k just to pay off the real estate agent, plus others).

  33. Hi 3rd Generation,

    Thanks for your passionate comments.

    It would be tough to make the argument that 100% of Cwide employees originated toxic loans.

    Even though their delinquencies and foreclosures are rising, the majority of the loans in their portfolio are still performing.

    Well, BOA has some time before the merger goes through. Some are saying that if the market deteriorates further, they could decide to pass on the deal, and don’t Countrywide shareholders still have to approve the merger?

    How do you think they’ll vote?

  34. As long as the employees are able to retain their jobs at BOA or are able to pick up work at another institution, the bills get paid and life goes on.


    The entire finance industry will be in serious contraction and many people will be thrown out of work. Given that the finance industry has been in a disproportional winner since the 1982 bear market low, it also stands to be a disproportional loser. We can’t make a living selling insurance policies to one another. Someone has to make stuff.

    The entire reason this deal was thrown together in this fashion was most likely to keep all the structured debt that is on Countrywide’s balance sheet from being “marked to market.” Here is my take on it.

    Had this occurred, every other mortgage finance company would have had several tens or hundreds of billions of dollars chopped off their balance sheet.


    If we all live in the same neighborhood (Ballard) and we all own pre-war craftsmans, we all can convince one another that our POS homes are all worth $1.5M each. This works as long as we all greet one another by saying, “Hi Rhonda and Jillayne, nice $1.5M craftsman you got there.”

    “Why thankyou, El. Nice $1.5M craftsman you have too.”

    This works as long as nobody tries to sell to an outsider. We can all walk around under the delusion that we are all millionaires.

    Well, if Ardell has a tough period and burns through her cash, she starts to pawn her yard gnomes and Nordic Track. Eventually, Ardell has to declare BK, and her house will be seized to pay down her debt.


    Reba gets wind that Ardell is going to file BK, and all the neighbors make a run for the Depends. What if she has to sell? We tell one another we have $1.5M craftsmans, but we know our drafty POS houses wouldn’t fetch more than $300K on the open market.

    If Ardell sells her craftsman for $300K, Rhonda, Reba, Jillayne and I all lose $1.2M overnight.

    Dustin steps in and forces Jillayne to buy-out Ardell to keep her house from getting marked to market. That way, we all get to keep deluding ourselves into thinking we are millionaires, and not having our own loans called by the bank.

    That’s what this is all about.

    If this mess is a baseball game, we just finished the national anthem. We have a long way to go, and yes, homes in this area will be selling for 60-80% off their peak price.

    Plan on it.

  35. No way Eleua,

    I’m taking my yard gnomes, the Nordic track, the kitchen cabinets, the stained glass window…hey, I’m the pro around here. You think I’m going to cut bait like a loser 🙂

    Happy New Year E. I missed ya around here. Keep me centered and don’t forget to lock the door on your way out. You bring the heavy stuff.

    No, I still don’t give a RA about the banks…everyone else does that for me. I give a RA about real estate.

  36. Oh God,

    Trying to crash the real estate market isn’t enough for these bubble-heads. Now they want to start a run on the banks.

    Where do these yo-yos come from? “GET YOUR MONEY OUT OF BANK OF AMERICA NOW!”

  37. Hey E.

    Who is Dustin supposed to be in that story? The Godfather?
    That’s who used to buy all the houses in my neighborhood, but for a different reason. He was also the Undertaker.

  38. I already took mine out of BoA. Actually, I have reduced my holdings in US bank deposits over 90%. There is a reason for this.

    Dustin = Treas Secretary
    Jillayne = BoA
    Ardell = CWide
    Reba = financial media
    Rhonda/me = other banks

  39. I quit even visting Zillow’s boards because of what I call the low signal to noise ratio over there (little or no information and just a lot of worthless opinions). And that’s despite the fact that posting there did get me a rather nice listing.

    But anyway, back in August I remember one guy repeatedly implying that a bank machine outage (or Internet site outage) was a sign that a large bank or investment firm was about to go under. And that a law banning the export of pennies (which he thought was a new law) was a sign that our currency was in trouble.

    It’s amazing how people think they can have an effect on the world by posting on an Internet site. That can work with very low cap stocks, but other than that, they’re just blowing into the wind.

  40. Jillayne,

    Another Fortune/CNNMoney’s reporter, Roddy Boyd, seems to have a more balanced view of the BofA – CWide buyout.

    Roddy’s trying to be more balenced in his article writing than he is in person, here’s my (ultra-bearish) point of view:

    • I don’t think the deal will actually go through, CFC has to survive another 1.5 quarters, with what new liquidity?
    • Even if it goes through, BofA will operate CFC as a wholy owned sub (they can drop it if the legal or credit liabilities get out of hand).
    • It didn’t cost BofA much to do this (all stock), and has the (small) potential to boost confidence in the credit markets.
    • BofA doesn’t need to take any more risk with CFC.
    • BofA and CFC can finally publicly start the process of moving over the servicing platform to BofA
    • If by some miricle, the credit markets right themselves, BofA will have received a great deal right at the bottom.
    o Otherwise, when CFC announces huge writedowns, CFC will either go BK or renegotiate the price to cut out common stock holders (and maybe even some preferred holders).
    • If CFC goes BK, BofA will flip a switch to take over CFC’s servicing platform, FDIC will get Countrywide Bank.

  41. Wow, I take a night off to go grocery shopping and watch The 3:10 to Yuma and I get cast in an Eleua script! I was thinking about you the other day, Eleua. I hope all has been well for you and your family.

    I like your analogy. What do you think will happen to the Countrywide/BOA deal between now and third quarter 2008?

  42. Pingback: 45 Things I Learned at RE Connect «

  43. I seriously doubt the deal will be consumated. I think this was a desparate attempt to keep price discovery from occurring. If the banks catch a serious downdraft (I put that at 80% by the end of the year), BoA might just saw off CW and be done with it.

    Believe me. BoA has enough of their own problems.

    The family is doing well. We spent the day at Hurricane Ridge and had a blast.

    Stay well. Stay solvent. Stay alert.


  44. Interesting, but I can’t say I would agree with your position in all areas. One thing you state is patently incorrect.

    “BOA employees originate mortgage loans at the retail level from the banking branches with call centers taking loan apps.”

    Bank of America employes just under 2,000 mortgage loan officers that are paid 100% commission and who source their own business. They do not receive loans from the banking branches. In fact, the personal bankers in those banking branches, including those located inside grocery stores, can and are certainly expected to originate mortgage loans. Furthermore, the Bank of America call centers originate directly. They do not share business with other retail channels.

    Ultimately. Countrywide’s retail and call center structure isn’t that much of a mismatch to Bank og America’s current one. I know because I have worked for both.

  45. Hi Ken,

    Thanks for stopping by RCG. Questions: At BOA, who receives the leads from customers who walk into a BOA retail branch?

    Does BOA serve any residential builders and if so, how are loan originators paired with new construction projects?

    Where do the 100% commissioned BOA LOs hang out…meaning, are they all located in one central geographic area and report to a head of residential lending or are all of them stationed near a retail bank branch and report to a bank branch manager?

    Thanks for giving us the view inside from your vantage point. I appreciate it!

  46. Bank of America calls the “retail branch” a banking center. In each banking center will be 2 or 3 personal bankers and a banking center manager who can provide mortgage loans to both current banking customers and new customers. They originate the loans there in the banking center and are supported by an operations center for processing, underwriting and closing. The only customers that the banking center will “refer” are those needing government loans, construction loans, or some other “niche” loans like the Doctor Loan Program. For those clients, they may be referred to a mortgage loan officer like myself. Understand this is reduced commission for the mortgage loan officer and no commission for the personal banker so it’s not something in either person’s business plan…

    I can’t speak about a market other than where I am with regard to residential builder alliances, but in our area there are at least 3 that I know of. The bank has an alliance team that puts togethere the alliance agreement and it is tailored to each alliance. Typically, we allow the builder to have a large degree of input on the people who will support the alliance.

    The 100% commission mortgage loan officers are all over, at least in markets where Bank of America is located. They do not office in a banking center but have seperate office locations. The reporting structure for management is seperate from the retail banking structure. The operations for underwriting and closing are located in the same facility but the staff is seperate from retail banking as well. As a mortgage loan officer, I can lend in all 50 states so you already know where at least one of them “hang’s out”.

    Overall, in my 12 years in mortgage lending, the retail mortgage loan officers at Bank of America service customers incredibly well.

  47. Well that’s interesting.

    It makes me wonder how compliance is handled when there are one set of employees in the bank and another set in a mortgage branch.

    So if I’m a Countrywide employee and I’m use to getting leads from company advertising, I’m going to have to decide to join a bank branch and learn checking and savings and consumer loans, too and probably get paid less than an LO who sources his/her own leads?

    Now that I’m thinking about this, I believe WAMU has a similar arrangement.

    It sounds like from your experience, the system works well for the consumer.

  48. Eleua’s post is hilarious here. From what I’ve seen of the posts here, what I’ve read in many other media outlets, and discussions with others in the industry (including CW) no one person is going to be right about what happens with this buyout. Having been through enough of these kinds of things when I was in the tech sector what is occurring here between these two banking/lending giants is no different. One sees a potential value deal and a way to fill a niche that it currently isn’t performing to its highest ability. The other company has various issues internally – including the fact that Mozilla was already planning on retiring anyway – and sees a way to keep a company going longer term once what has been the head of the organization leaves.

    Over many years CW has done a much better job than BOA in the mortgage arena, regardless of what people want to say about the past year’s issues/news. BOA has found a way to fill the whole by purchasing CW. The founder of CW can walk away from CW knowing there is a “sort of” longer term plan for continuation of what he’s built up than what was there before. He’d been retained to stay an extra 3 years back a year or two ago because there wasn’t a good continuation plan for replacing him. Well, here you go. Instead of a new CEO it’s going to be a new owner.

    My understanding in talking to some CW people is that BOA plans to keep CW branches performing as they always have and that BOA will adapt around their business, meaning, they’ll let them continue what they already do now and not change it by merging branches. But, like any other company merger or buyout I’ve ever seen, things change. I’ll be more interested to see what it looks like a year or two from now. I do have to say I’m always surprised how many people seem to hate CW – I’ve had numerous loans with them over the past 13 years and never had a problem and I’ve had lots of clients use their products without issue as well.

  49. I don’t hate CW, but I’ve never really liked working with them from a lender level. They really pushed using their appraisers, their credit company…etc. I was surprised to see today that CNBC reported Wells Fargo as the #1 subprime lender and Countrywide as #2. I would not have pictured Wells even in the top 5…shows you what I know!

  50. Eleua–where’ve ya been? 🙂 I’m just reading your comments and I’m laughing my BOA off! I’m in the process of pulling my funds from WaMU…I’m going to a credit union. It’s a pain in the butt to close accounts but I just can’t support them anymore for how they’ve been treating brokers.

  51. I’ve been reading Eleua’s posts in various forums on and off since sometime in ’05 or ’06. His views so far have provided a fairly accurate blueprint for what is currently happening in the credit markets.Moreso than anyone else I can think of whose posts I have read in local RE-related blogs. I wouldn’t discount his opinions.

  52. H czb,

    Well, Eleua seriously doubts the Countrywide deal will go through. We will know very soon.

    In other BoA news, I am now getting mail from them DAILY inviting me to open a checking account, get a credit card, open a HELOC, or refinance. I wonder how much money they’re spending in direct mail advertising?

  53. Hi Rhonda,

    Would you like me to buy you a t-shirt for your birthday?

    I like ML-implode because they surf the web for news stories so I don’t have to. I’ve found some truly interesting blogs from their re-posts. In the forums today they’ve been talking about the dismantling of Aurora Loan Services and now talk is surfacing about MortgageIT.

  54. Jillayne,
    Beyond them being a pain in the rear to work with… when WaMU stated that they would contact consumers on brokered loans to make sure they understand the transaction and how the broker is being compensated…that was it for me. Bankers (and correspondent lenders, like me) do not disclose what is paid on the “back end”. If anything, a proper broker is more transparent than we are. Yet to stand on a pedestal and act like it’s the dirty broker who caused the mortgage meltdown when WaMU is one the big-daddy’s in the OptionARM area…I just can’t take it.

    WaMu stated (from a CNN article): “…brokers should also disclose the amount of their compensation, Washington Mutual said, adding that it would try to call every borrower represented by a broker before closing to review the loan terms.” (Dear M/M Borrower, your broker LO offered you this? Well…here at WaMu, we can better that…)

    Okay Mr/Mrs/Ms Banker…how about you reveal what YOU’re making on the “back end”…it’s not YSP…but it’s compensation the consumer doesn’t see. I guess that makes it okay (NOT).

    In my 8 years as a Mortgage Professional, I’ve closed one loan with WaMU…it’s a long story.

  55. Jillayne, my birthday is two months from today. 🙂 I like my t-shirts extra large (good pajamas). I do visit mortgage implode…I see too many people “hang out” there getting very worked up instead of focusing on the business at hand. No different than getting side tracked blogging. It is an amazing site!

  56. Hi Rhonda,

    I remember reading about this somewhere. I will try to find the article. Oh here it is! LOL:

    We talked about this in October. I believe WAMU is following the advice of legal counsel: Limit your liability by doing some due diligence work on the front end to make sure that loans originated by third parties had all disclosures explained to the consumer.

    All originators, no matter where they work, but especially third party originators (brokers) should expect more of this from all lenders, not just WaMu.

    We have not even begun to see lawsuits kick into gear on all the defaults happening right now. WaMu is trying to be proactive. I wouldn’t take it personally. Since you always explain everything to the client, take the opportunity to explain to the client why WaMu will be calling them. The client will love you for the heads up.

  57. Rhonda and Jillayne:

    Just when I think a thread has run out of steam (or gotten too steamy) you pull me back in!

    I saw the same notice from WAMU and came to largely the same conclusion that Jillayne has. It’s one more step of CYA, to make sure the borrower understands the loan, and understanding the pricing structure is a part of that understanding. We may very well see more of it form other lenders, especially if the savings in defaults proves to be greater than the costs.

    I bet a lot of lenders are wishing now that they had taken one more step to ensure the quality of the loan (like making sure that it was really an owner occupied transaction, f’rinstance!)

    I have yet to do a correspondent loan in wholesale (tho’ they are avaiblable to me), so I have never known the luxury of having my compensation hidden. In addition, I generally make most of my compensation from the YSP, and often pay all or part of the borrowers closing costs. I have never once had a problem explaining the YSP (but I’m sure there’s a first for everything).

    You are SO right about pointing out the hypocrisy in the retail channel, when they do NOT have to show what they make.

    I have a loan going w/ WAMU right now, so I will try and remember to let you know how the experience goes with their people calling my borrower. I have a bit of concern with their operations as they reorganize, but they were the only option I had that fit what my borrower wanted, with the qualifications I had to work with.

    It doesn’t make sense that the wholesale channel would throw the loan to the retail channel, since it would harm that group’s bottom line and compensation, ultimately, but we have all learned to be alert to the unexpected sucker punch!

  58. Jillayne, I don’t buy that re: WaMU. This was during a time (October) when many banks were making hinting that the mortgage mess was the fault of mortgage brokers…excluding themselves who created these programs and sell them on a retail level and push them to brokers.

    CYA? If the loan goes bad and they can find fault with the originating source…it’s back to our line!

  59. Over at Calculated risk a few days ago, they quoted JP Morgan Chase CEO as stating that broker originated loans were performing 3 times worse than their own originations. If WAMU is seeing the same thing and trying to shore-up their reputation, I’m not sure I blame them for doing a bit of DD on their brokers.

    Let me see if I can find that interview…. here it is (I won’t link so to avoid the spam bin):

    James Dimon:
    This is a lesson that’s been learned over and over about broker originations, they perform much worse than our own originations, and if you separate home equity into we call it kind of good bank, bad bank, and broker so I would say it’s less than 20%, but a lot of the losses are coming from that 20%, which is high LTV, broker originated businesses. High LTV business is also bad in its own.

    And the 20% you referred to a minute ago in round numbers is the sort of specifically high LTV and originated away [by brokers] is that right?

    James Dimon:
    It’s been very consistent In both our own originated and broker originated, high LTV, stated income is bad. It is three times worse in broker than it is in our own.


  60. I believe the number of individuals who work as LOs for mortgage brokers out number those who work for mortgage bankers. If mortgage brokers are originating more loans than mortgage bankers, then of course the broker numbers will show a higher figure over banker figures.

    This really says it all and should not be a surprise:

    “It’s been very consistent In both our own originated and broker originated, high LTV, stated income is bad. It is three times worse in broker than it is in our own.”

    Jillayne, do you have stats on how many brokers vs bankers originate mortgages?  If there are 3x as many brokers than bankers, then the borrower has the same odds with either party.

    Why does the bank offer high ltv, stated income loans when they’re bad?  Give them to the broker to sale, underwrite them from the broker and buy them from the broker…bad broker?  or bad bank?

    As a Correspondent Lender, we underwrite and fund the loans…the bank buys them after closing from our credit line.  If they don’t like a loan that we’ve originated…it’s back in our line.




  61. I don’t doubt you have very high standards, Rhonda. I’m sure many brokers and correspondent lenders are being tarred with a brush they don’t deserve.

    That said, I assume that Dimon is referring to percentages, not counts. Anything else would by silly, and CEOs usually aren’t too silly (but not always!). So it wouldn’t matter how many loans originated by brokers there are, compared to bankers.

    There are (or were) a lot of unscrupulous brokers out there, as has become increasingly clear. There were enough that they broke the system, it appears.

  62. biliruben, you don’t think CEOs are going to spin things in their favor? Aw come on!

    It’s my understanding that last year (probably before August), 70% of mortgages were originated from mortgage brokers. It only makes sense that one could point a finger and say “hey look at these bad loans, 70% of them are from mortgage brokers”.

    I can tell you stories about many LO’s who work for banks and brokers who are not anyone Mom would be proud of…at least not my Mom!  Most of the stories I have written about at RCG and Mortgage Porter are about mortgage banker LOs.   I don’t know why that is…it just is.


  63. It is amazingly difficult to get the full picture, and make a coherent judgement about what percentage of blame lies with which business channel. It’s difficult to wholly believe any source that has an agenda to forward (it wasn’t our fault!!, seems to be the recurring refrain), and there has not been a lot of 3rd party independent data to draw from.

    I’m rather amazed that there is not a decent book out there about the very public collapse of Ameriquest, which clearly foreshadowed the current crisis, and can certainly be assumed to have caused a fair share of the mess (a banker, by the way).

    If any readers out there know of reliable, current and relevant data on originating, servicing, and loan performance stats, please share!

    We cannot rely on the mainstream media to keep us well informed, nor the paid talking heads that appear on them. The media is primarily interested in entertainment, and the resulting profits.

  64. Hi Roger,

    Wa State DFI did a consumer study after they settled with Household Finance. Results were interesting. They found that all the people who fell victim to HFC’s predatory lending tactics all had one thing in common: They all only had a high school education and didn’t understand the basics about how a loan amortizes, interest rates, the secondary market, and so forth. just released a report a couple of months ago where they dove into a pile of collateralized debt obligations (CDOs) and re-underwrote the loans. These were vintage 2006 subprime loans with good credit scores: 686+ but all had early payment defaults. You’ll never guess what they found.

  65. Biliruben gave us some comments from a CR blog post. Here is the direct link:

    What we need to do here is to look beyond the words to what’s not being said by JP Morgan.

    I once had a manager that told me that when he was learning to ski through the trees, you have to learn how to look at the spaces between the trees and not focus on the trees.

    What do you all think is being said in that report?
    (I’ll tell you what I think but I’d rather hear your take first.)

  66. In regards to what is broken, I would argue that many systems are broken.

    What has easily become the most clear is:

    1) We under-priced risk

    2) We threw underwriting standards out the window.

    Both will now make a swift and definitive comeback commencing immediately.

  67. Countrywide update:

    Countrywide has sweetened annual bonus awards for a handful of its top executives as an incentive for them to remain with the mortgage lender as it goes through the process of being acquired by Bank of America Corp., according to regulatory filings Thursday, Jan 17, 2008.

    Countrywide’s compensation committee has approved retention awards of cash and cash-settled restricted stock units for David Sambol, president and chief operating officer; Eric Sieracki, executive managing director and chief financial officer; Ranjit Kripalani, executive managing director, Capital Markets; and, Carlos M. Garcia, executive managing director, Banking and Insurance, according to the filing with the Securities and Exchange Commission…

    …In the filing, Countrywide also disclosed that should shareholders not approve the takeover by Bank of America, the two companies have agreed to restructure their agreement and resubmit it to Countrywide shareholders.

    The agreement also includes a provision that calls under specific circumstances for Countrywide to pay Bank of America $160 million should the proposed acquisition fall through.

    Countrywide shares slid 46 cents, or 7.7 percent, to $5.48 Thursday

  68. Trying to find answers to Professor Schlicke’s question produced an interesting report. Here is the link to a powerpoint report from Fitch on CDO’s and subprime and Alt A performance. Nothing in there about channel origination.,1,Subprime Mortgage Distress Effect on CDOs

    Great data. Not sure if it is the report the Prof refers to, but fascinating and concise.

    One of the things that Chase/JP Morgan does NOT say, is anything about closing the wholesale channel at Chase.

    Now, I have never used Chase, but the only rate sheets that are sent to me have only the Option Arm. If they have a 30 yr fixed, they sure aren’t promoting it!

    Wonder if that has anything to do with the problem?

    Also, if broker originated loans were truly that much riskier to investors (as suggested by Limon), then it the elevated risk would be priced in by now on the wholesale side. Any actuary that has not not prudently priced in the risk with all of the warning signs in the market won’t be employed long

    Based on my continued ability to effectively compete against retail, I’d have to conclude the additional risk is not that bad.

    And a tip of the hat to Calculated Risk. Brainy stuff, good STN ratio, and anyone that links to Paul Krugman is AOK in my book.

  69. Follow up to that question.

    Limon indicates that the poorer performance of loans originated in the wholesale channel was NOT new information. If such a statement is true, then the risk has always been priced in (possibly not enough), yet wholesale consistently produces better rates at a lower price than retail.

    This suggests that IF the risks can be sufficiently reduced in the wholesale channel, the pricing differential should get even better! We have already seen banks doing more due diligence (WAMU), with more likely to come. I know that my broker has been on the leading edge when it comes to providing written disclosures that go well beyond the legal requirements (clear, written terms for the Option ARM, a second hand-written and signed document testifying to the stated income, a giant FBI seal and warning about loan fraud), so I don’t worry much about more due diligence.

    I can state without fear of contradiction that the lenders are tightening guideline standards (and enforcement of such), with changes coming nearly every day.

    And, unlike WAMU, I have never threatened to withdraw business from an appraiser for simply telling the truth!

  70. Follow up and ancillary info.

    Flagstar has announced temporary suspension of Jumbo ARMS and fixed. Odd, for them to exit entirely instead of pricing up, or toughening the guidelines.

    I don’t know big they are in this arena, but overall they have been a good wholesale lender. I’ll try to find more info.

    Meanwhile, other lenders seem to have adequate appetite for Jumbos, but only of the risk-free kind (full doc, low LTV, decent credit).

  71. I’ve heard alot about CW’s been not doing well; i didn’t pay close attention to what’s going on with them. I’m surprised to hear about the buyout proposal from BOA, and with $6bil; i thought they worth much more than that, but well, after reveiwing more articles about their current businesses, I can see why BOA is proposing this deal. I actually like to work with CW because they were good and quick in response when I did loans with them.

  72. I agree with an earlier statement of BofA getting the opportunity to review CW books on the first 2bil injected allowed them to play their hand. I also believe B/A is looking at more then just mortgages regardless how much their paying for the buyout. With that kind of potential client base one has to consider all other aspects of the banking industry and the array of other products and services that B/A will solicit to that $1.48 trillion portfolio.

  73. “the book value for Countrywide, as of December, was around $20 a share. In January, Bank of America agreed to pay $4 billion for Countrywide, which equates to an offer of less than $8 a share.

    “It appears that [Countrywide]’s management engaged in a rushed process to sell itself and failed to conduct that process in a sufficiently considered and diligent manner,” the letter reads. “We note with concern the significant spike in the volume and price of the company’s shares over the three days preceding the company’s announcement of the merger.”

    Full story:

  74. BOA may have even helped push the media buttons to further erode the price to a level they knew would be profitable.I’m surprised to hear about the buyout proposal from BOA, and with $6bil; i thought they worth much more than that, but well, after reveiwing more articles about their current businesses.Offices north London

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