5 billion from $152 million a year earlier. Analysts think those losses are bound to mount as more borrowers default on their home loans. Countrywide\’s near collapse reflect edthe troubles of the overall US housing market and the big lender is particularly exposed to losses in the subprime mortgage market. 60 per diluted share.
The deal makes Bank of America the largest US mortgage originator and servicer. \”Bank of America said it would continue its long-established policy of not originating subprime mortgages — those to borrowers with poor credit histories. When the deal was announced Jan. Based on that drop, Bank of America (NYSE: BAC) paid about $2.
50 per share to Monday\’s closing price of $23. The company\’s provision for loan losses rose to $1. \”Mortgages are one of the three main cornerstone consumer financial products along with deposits and credit cards,\” said Bank of America chairman and chief executive Kenneth Lewis. In the same period last year, it posted a profit of $434 million, or 72 cents per diluted share.
87 per share. 1822 of a share of BofA stock stock in exchange for each share of California-based Countrywide. Both concerns have mortgage-lending operations in the Triangle, though Bank of America hasn\’t said specifically where it will cut jobs. 11, it was valued at around $4 billion.
The surge in suprime loans fueled a real estate boom that resulted in meltdown. Bank of America said Tuesday it completed its purchase of Countrywide Financial, the largest US mortgage lender that had been at the center of the country\’s subprime loan crisis. In late April, Countrywide reported a first-quarter net loss of $893 million, or $1. The layoffs are expected to occur over the next two years.
But it puts BofA in the thick of Countrywide\’s legal and financial troubles. has completed its acquisition of California mortgage lender Countrywide Financial Corp. In January, Bank of America agreed to pay four billion dollars in shares for Countrywide in a deal that rescued the nation\’s largest mortgage lender from a collapse that could have sent shock waves through the world\’s biggest economy. Bank of America Corp.
5 billion for Countrywide. However, BofA\’s stock price has since declined from $38. Bank of America\’s purchase closes a long saga for Countrywide, once a powerhouse mortgage lender whose value sank in the midst of the downturn in subprime lending. Most of the reductions, which will occur throughout the country, will take place where the two companies have significant overlap.
\”This purchase significantly increases Bank of America\’s market share in consumer real estate, and as our companies combine, we believe Bank of America will benefit from excellent systems and a broad distribution network that will offer more ways to meet our customers\’ credit needs. Under the agreement, Countrywide shareholders received 0. Countrywide also faces legal troubles, including lawsuits from three states accusing it of encouraging borrowers to take out loans that Countrywide knew were unlikely to be paid back. Last week, BofA announced it would cut 7,500 jobs as part of its acquisition of Countrywide.
Residential charge-offs, or loans written off as not being paid, grew to $606 million in the latest quarter from $39 million in the year-prior period.
