Bank Of America buying Countrywide

[donrock]

I don't know how many people saw this, but it looks like BofA may buy C'wide. Do you think it will be good or bad for the business and do you think it will help the RE crisis?
It looks like a positive step to me.

[LOTrainer]

I don't know how many people saw this, but it looks like BofA may buy C'wide. Do you think it will be good or bad for the business and do you think it will help the RE crisis?
It looks like a positive step to me.

There are quite a few ways to look at this. I have previously worked for Countrywide and can say that the people on CW's retail side are not too pleased with regard to this news. Rumor has it that BofA only wants Countrywide for the servicing side of the industry, and could quite possibly "modify" the entire retail side as soon as it is acquired. This could mean huge layoffs for current CW employees (not good for the overall economy).

Overall, though, it's a good thing that somebody is stepping in to cushion the blow of CW's "demise" and be able to soften the impact a BK would have.

[donrock]

Andy,

Good observation. CNBC sort of hinted at the same thing about the servicing side of the deal.
I'm sure BofA intentions are not completely altruistic.
It will make for some interesting debates between now and when or if it happens.

Don

[LOTrainer]

Andy,

Good observation. CNBC sort of hinted at the same thing about the servicing side of the deal.
I'm sure BofA intentions are not completely altruistic.
It will make for some interesting debates between now and when or if it happens.

Don

I absolutely agree with that, and I saw that you posted this on a couple other forums as well, so I look forward to hearing the debates go back and forth!

[thedeallocator]

BofA has a lot of walk-in customers who aleady bank with them. I don't think they will be interested in the retail side of Countrywide. It may be tough for the Countrywide employees, especially if BofA decides to strip down the current retail mortgage operations of Countrywide. It makes more sense for BofA o buy itfor the servicing, as this is a cash machine.

[carrot]

I saw it on the news last night also and one of the forums I was on yesterday was a blog from CW that everything was ok.

Time will tell!

[LOTrainer]

BofA has a lot of walk-in customers who aleady bank with them. I don't think they will be interested in the retail side of Countrywide. It may be tough for the Countrywide employees, especially if BofA decides to strip down the current retail mortgage operations of Countrywide. It makes more sense for BofA o buy itfor the servicing, as this is a cash machine.

That is very true, and I completely agree with that...as bad as that is for the families involved. The primary goal for BofA this entire time was to get their hands on the servicing portfolio.

[LOTrainer]

I saw it on the news last night also and one of the forums I was on yesterday was a blog from CW that everything was ok.

Time will tell!

It really is all over the place, so we'll see how the clientele react to this. Are people going to try and refi out of CW, or are they going to try and ride it out?

[donrock]

Thanks to all of you who replied to my post. You have all got a pretty good handle on the deal is all about, but do you think it will have any bearing on helping us get out of the crisis we're in with the housing market.

Here's another one to jump on. After the blockbuster news of yesterday a huge new rumor is making the rounds. JP Morgan, the big investment banker, may buy WaMu. If these two things happen I imagine others will follow and I believe consumer confidence in the real estate market will start to come back. If this happens then maybe people will start purchasing homes again and slowly but surely we'll pull out of this crisis and get back to normal.

One of the problems with this scenario is that home lending will never be the same. C'wide will have a bank lending mentality, which if you're in the
business know is not that great for business. WaMu is already a bank but they'll start acting like one again if JP Morgan buys them. Right now it's tough to get a loan and I imagine it won't get much easier for a few years or at least until competition to get borrowers really kicks in.

Let's hear again from the people trying to make a living in the business today.

Don

[thedeallocator]

Hi Donrock,
You made some very interesting points there. However, I wonder whether the retail lenders have much say in how aggressive the lending guidelines can be, because the ultimate "decider" is the Wall St guy who buys these mortgage-backed securities. If Wall Street decides to soften the lending guidelines, then I think any bank or mortgage operation will want to make some money.

[LOTrainer]

Thanks to all of you who replied to my post. You have all got a pretty good handle on the deal is all about, but do you think it will have any bearing on helping us get out of the crisis we're in with the housing market.

Here's another one to jump on. After the blockbuster news of yesterday a huge new rumor is making the rounds. JP Morgan, the big investment banker, may buy WaMu. If these two things happen I imagine others will follow and I believe consumer confidence in the real estate market will start to come back. If this happens then maybe people will start purchasing homes again and slowly but surely we'll pull out of this crisis and get back to normal.

One of the problems with this scenario is that home lending will never be the same. C'wide will have a bank lending mentality, which if you're in the
business know is not that great for business. WaMu is already a bank but they'll start acting like one again if JP Morgan buys them. Right now it's tough to get a loan and I imagine it won't get much easier for a few years or at least until competition to get borrowers really kicks in.

Let's hear again from the people trying to make a living in the business today.

Don

Don, I have to say that the guidelines are going to be stricter (in my opinion) when it comes to Countrywide guidelines since they now have to adhere to BofA's overall business development plan. Eventhough the full integration of BofA and Countrywide won't happen until at least 2009, they will start with the loans that the retail end is currently writing and go from there.

With regard to JPMorgan and WaMu, I definitely think that WaMu needs something right now to give them a little "pick-me-up". They have been hammered with bad publicity (a little less than Countrywide), but they have also been hammered with the appraisal issue as well. I can definitely see JPMorgan buying them, and I do think it would have a positive impact on consumer confidence.

However, that being said, I don't know how much it would influence the home-buying because people are still under "media influence" where everything is negative no matter how you look at it. So, they will most likely attempt to save a few thousand dollars on the asking prices and wait until late 2008 to get off the fence and buy.

Just my opinion on the situation.

[LOTrainer]

Hi Donrock,
You made some very interesting points there. However, I wonder whether the retail lenders have much say in how aggressive the lending guidelines can be, because the ultimate "decider" is the Wall St guy who buys these mortgage-backed securities. If Wall Street decides to soften the lending guidelines, then I think any bank or mortgage operation will want to make some money.

However, Bank of America has always been rather strict with regard to their guidelines. They have never ventured into the sub-prime world, and have always been an A paper bank. With regard to Countrywide in this particular issue, drastic changes will soon be made (if they already haven't) to their underwriting guidelines only allowing A paper.

If Wall Street opens back up with their investments in MBS again, I don't think that will change the overall business model for BofA and therefore would not alter the underwriting for CW. Just my opinion, but I do think this would be the case for other banks/lenders as well.