Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Nye Lavalle
Buyout, bailout, whatever you want to call it, Countrywide is gone....


Bank of America to Acquire Countrywide for $4 Billion (Update1)
By David Mildenberg



Jan. 11 (Bloomberg) -- Bank of America Corp., the biggest U.S. bank by market value, agreed to buy Countrywide Financial Corp. for about $4 billion, five months after making a money- losing $2 billion investment in the unprofitable mortgage lender.

Bank of America will acquire Countrywide for approximately $7.16 a share in stock, the Charlotte, North Carolina-based company said in a statement today. The offer is 7.6 percent below Countrywide's closing share price on the New York Stock Exchange.

``I hope Bank of America isn't throwing good money after bad,'' said Eric Schopf, a fund manager at Baltimore-based Hardesty Capital Management LLC, which owns 216,000 Bank of America shares, before the takeover announcement. ``They struck a deal that wasn't very attractive. Hopefully they can get it right the second time around.''

Countrywide, the largest independent U.S. mortgage company, gives Bank of America about 9 million borrowers and fees from servicing $1.5 trillion of mortgages. Countrywide's market value plummeted 82 percent to $4.5 billion during the past 12 months as the Calabasas, California-based lender reported its first quarterly loss in 25 years.

Bank of America, led by Chief Executive Officer Ken Lewis, was sitting on a potential loss of about $1.3 billion from its stake in Countrywide before yesterday, when the company rose 51 percent to $7.75 in New York Stock Exchange composite trading on optimism about a potential bid.

Preferred Stock

Countrywide, founded in 1969 by CEO Angelo Mozilo, sold $2 billion of preferred stock to Bank of America in August to bolster its finances amid the worst housing slump since the Great Depression. The stock offers a yield of 7.25 percent and is convertible into common shares at a price of $18, 57 percent above yesterday's closing price.

The takeover of Countrywide is a fraction the size of previous deals engineered by Lewis, including the $48 billion purchase of FleetBoston Financial Corp. in 2004 and $35 billion acquisition of credit card lender MBNA Corp. in 2006.

Bank of America rose 56 cents, or 1.5 percent, to $39.30 yesterday in NYSE trading. The stock has declined 26 percent during the past 12 months, compared with the 28 percent drop of the 24-member KBW Bank Index. Countrywide plummeted 82 percent.

Lewis is still grappling with fallout from the 93 percent drop in third-quarter profit at the company's investment banking unit. He cut 500 jobs, ousted the head of the unit and vowed to scale back risk. Lewis said last month he wanted to expand home lending without an acquisition. Consumer banking accounts for about half of Bank of America's earnings.

Stock Slump

Countrywide's market value fell below $3 billion this week for the first time in a decade amid renewed concern that the company was going bankrupt, a rumor the company denied. The speculation may have driven Countrywide's price down to an attractive level, said Robert Pardes, the former head of OceanFirst Financial Corp.'s Columbia Home Loans unit in New Jersey, which closed last year.

``It is an absolute opportunity for Bank of America to acquire an infrastructure they admire, including Countrywide's great technology, and, at these levels, it's mitigating most of the asset issues,'' he said.

Countrywide traded as high as $45.26 last January and the workforce peaked at 61,586 in July before declining 18 percent to 50,600 at the end of 2007. Monthly loans, which set a record at $53 billion in August 2005, have averaged about half that amount for the past four months and totaled $416 billion last year.

Speculation about bankruptcy surfaced last year after investors balked at buying Countrywide's short-term debt and concern about rising defaults brought markets where the company sold its mortgages to a standstill. The lender tapped emergency credit lines and arranged a bailout from Bank of America.

At the end of 2007, more than 7 percent of payments in the company's $1.5 trillion servicing portfolio were more than 60 days overdue.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net

Last Updated: January 11, 2008 07:17 EST
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Thanks for the continuing CW updates Nye!

 

Countrywide is right out here in Plano Texas and I've

been out there numerous times.  Indeed CW used to

be one of my accounts.  I never imagined it would fail

so dramatically.. As of last night CW was still running

TV ads locally.. That will likely continue but I'm afraid

the fraudsters will have to once again resort to their old

trick of simply changing the name and moving on.. Often

with the same dubious predatory executives.

 

Ed

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