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The long anticipated buyout of Countrywide Financial by Bank of America was the big story in mortgage land today. Mortgage brokers I spoke with say the deal is a good thing for the industry, putting a stronger financial foundation under America’s largest mortgage lender.
Some are still scratching their heads though as to why Bank of America would want Countrywide. Bank of America cut out its “wholesale” lending to independent mortgage reps last year. The bank prefers to originate loans through its own bank branches. Countrywide, on the other hand, sold mortgages every way it could. Bank of America could be after Countrywide’s giant loan servicing portfolio, but there are other less expensive ways to get those assets without buying a business with 1,000 offices and 50,000 plus employees. “I do wonder what the play is,” says Mitchell Ohlbaum, president of Legend Mortgage in Los Angeles.
In case you’re wondering what’s in it for Angelo Mozilo, Countrywide’s co-founder and ceo, the Los Angeles Times has done nice job of summing that up. He could get as much as $115 million in severance-related pay, as well as free rides on the corporate jet and country club membership until 2011. Rep. Barney Frank has even called on Mozilo to “donate a substantial portion of the $150 million he has collected over the last several years to nonprofits and other institutions that are helping us deal with the problem he helped create.”
Bank of America chief Ken Lewis said he’d didn’t expect to be offering Mozilo a job. “I would guess that he would want to go have some fun,” Lewis said. In case your wondering what that might look like to the right you see the blog paperdinero.com’s illustration of Mozilo on Fantasy Island.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.