Bank of America just bought Countrywide, the number 1 mortage lender, for $4 billion and may have saved the US economy. Ok, that is a bit of an exaggeration! But there is some level of merit to that statement.
Countrywide services about 1 in 6 home loans in the US and a bankruptcy would have created a major risk in the US economy. Bank of America has avoided that risk by purchasing the falling company. A bankruptcy of Countrywide would have probably shifted huge financial risk to Freddie Mac and Fannie Mae. The reason it would have affected those government agencies is because they are heavy buyers of Countrywide loans. So while I know Bank of America is not a savior of the economy, it definitely helped us avoid a potential catastrophe.
The question around the financial markets right now is if Bank of America made a smart move by purchasing Countrywide. Many people believe that they were able to buy low and get a great deal, but others believe that they may be throwing good money after bad (Bank of America bought a very small portion of Countrywide last year at about the same price they just paid for a huge amount). We’ll let the financial experts discuss this!
As always feel free to contact me with all of your real estate needs in New Orleans.
You may also be interested in: New Orleans Real Estate – The Definitive Blog
Darryl Glade ~ New Orleans Real Estate ~ 504.451.8960
Filed under: Housing Market | Tagged: countrywide, darryl glade, loans, New Orleans, real estate
[...] For another opinion about the importance of the move by BofA, check out what Darryl Glade, a New Orl… [...]
Darryl,
Right on the money! And money is the issue…BofA will be able to provide the funding that Countrywide could no longer get in order to continue to be competitive. Time will tell in regard to how astute BofA has been in measuing the risks vs. the advantages of the acquision. As of this moment, stock prices of other lenders have shot up…a financial salute to the deal.