Bank of America completed its purchase of Countrywide Financial today to little fanfare, creating the nation’s largest loan originator and servicer of home loans.
Despite loads of speculation surrounding the deal, it closed without a peep Tuesday, perhaps because the topic had been thoroughly exhausted over the past many months.
The combined lending giant will offer an array of basic mortgage offerings, including conforming loans and non-conforming loans “with terms expected to produce no greater risk of default than conforming loans.”
As we all know, there won’t be any negative amortization loans or anything else beyond a standard 10-year interest-only option, and low documentation loans will supposedly be curtailed as part of the evolution.
By mid-2009, the combined company will begin originating mortgages and home equity loans under the Bank of America namesake, and as part of the synergy, Countrywide customers will be marketed consumer products such as credit cards and deposit account services.
Shareholders of Countrywide received .1822 of a share of Bank of America stock in exchange for each of their shares, valuing the merger at just about $2.5 billion, well below the originally conceived $4 billion takeover price.
It’s hard to believe that just last year Bank of America was mulling the purchase of the now defunct mortgage lender for around $30 billion, a $5 billion premium to its market cap at that time.