Bank of America Acquisition of Countrywide

Bank of America agreed to purchase the remaining 84% it didn’t own for $4.1 Billion Dollars last week. Aside from a few regulatory hurdles it appears to be a done deal. The acquisition follows B of A’s August, 2007 investment of $2 Billion for stock in the company in an effort to stabilize Countrywide amidst looming foreclosures and credit woes. Hindsight points to B of A’s savvy decision in August to position itself for either (1) a significant stake in an important and very well run company for a bargain and (2) pre-position itself for the eventual buyout as occurred last week.

People that have experienced the mortgage process with both Countrywide and B of A may be few, but we have, on many occasions, witnessed first hand the ineptitude’s of B of A’s mortgage underwriting processes vs. Countrywide’s streamlined processing of loans on behalf of our clients. It seems that B of A rarely grasped the importance of transparency when it came to mortgages.

Borrowers, and their respective real estate agents, do not appreciate being put upon to provide pay stubs twice because the first copies were lost, or to produce the last 3 years income tax returns 5 days prior to closing on their new home. These are the types of hiccups we have commonly encountered when folks go to B of A for a residential mortgage. When we have warned clients about such pitfalls we have commonly heard the lamenting after the fact: “we wish we had listened to you. It was a mess……”

Countrywide “gets it”. They have long understood that it is not their place to add stress to what is already a stressful process, that of buying or refinancing a home. They are quite proficient at achieving the transparency that real estate agents need to effectively manage the many other issues faced by their clients in form of negotiations, contracts, contingencies, inspections, repairs, packing, school registrations, moving, job changes, etc. When a loan rep is calling every few days for another piece of paper because they didn’t know to ask for it when the client applied, it jacks up stress level, and as Countrywide has prov-en over the years, it is unnecessary in a well organized and well run entity.

In my opinion this is a good thing. Partnering the muscle of the nation’s largest bank with one of the pre-eminent mortgage processing and servicing companies should be a benefit to consumers, while at the same time bring a sense of relief to the mortgage and credit industries. But we must hope that B of A won’t mismanage Countrywide into the dysfunctional bureaucracy that is it’s own mortgage department.

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