Shares of Countrywide Fall to Near 52-Week Low

March 10, 2008 No Comments »

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Despite a buyout set for about $6.69 based on Bank of America’s close Friday, struggling mortgage lender Countrywide is trading at a steep discount amid concerns that the deal could stumble.

Over the weekend, the Wall Street Journal and other large media outlets reported that Countrywide faced an FBI probe regarding potential securities fraud, alleging that it misrepresented its financial position and the quality of its loans.

According to the article, the FBI is investigating 15 other “subprime companies” and their role in possible mortgage origination fraud and sketchy practices involved in the packaging and sale of mortgage-backed securities.

Shares of Countrywide were down 68 cents, or 13.41%, to $4.39 in early afternoon trading on Wall Street, nearly their lowest point in the last 52 weeks.

That prompted Bank of America spokesman Scott Silvestri to release a statement, saying the proposed merger was still on track, according to Forbes.

Investors have shunned the stock in recent weeks, with many concerned that Bank of America could reduce their buyout price or scrap the deal entirely as the mortgage crisis looks set to deepen.

Countrywide is currently involved in investigations by the SEC and Congress, several probes by state attorney generals, class action lawsuits, and scrutiny from scores of consumer advocacy groups.

(photo: rocketjim54)

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