Bank of America completes acquisition of Countrywide
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.The deal makes Bank of America the largest US mortgage originator and servicer.
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.
The value of the stock deal is lower because of the decline in the price of Bank of America shares.
“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.
“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.”
Bank of America said it would continue its long-established policy of not originating subprime mortgages — those to borrowers with poor credit histories. The surge in suprime loans fueled a real estate boom that resulted in meltdown.
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.