Bank of America boosts mortgage loan business with acquisition of Countrywide

By Lisa Kerner

Charlotte, N.C., July 1 - Bank of America Corp. said it completed the purchase of Countrywide Financial Corp., creating the nation's leading mortgage originator and servicer.

In January, Bank of America agreed to buy the diversified financial services provider for an estimated $4.1 billion. The deal is now worth a reported $2.5 billion due to falling stock prices.

Bank of America (NYSE: BAC) closed at $23.87 on June 30.

It was previously reported that Countrywide stockholders will receive 0.1822 shares of Bank of America stock in exchange for each of their Countrywide shares. The deal valued Countrywide stock at $7.16.

"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 chairman and chief executive officer Kenneth D. Lewis stated in a company news release.

Bank of America said it plans to offer the following types of first-lien mortgages: conforming loans including FHA and VA loans, non-conforming loans, interest-only fixed-rate and adjustable-rate mortgages and fixed-period ARMs.

The company noted it will not originate subprime mortgages, under a long-standing Bank of America policy.

Bank of America will discontinue some nontraditional mortgages including option-ARM loans and "significantly curtail" some other nontraditional mortgages, such as certain low-documentation loans.

Countrywide's combined national consumer mortgage division will be based in Calabasas, Calif., while the combined company will begin originating mortgage and home equity products under the Bank of America brand by mid-2009, according to the release.

Bank of America, based in Charlotte, N.C., is a holding company that provides banking and financial services.

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