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Bank of America could bail on Countrywide


The housing market has shown no clear signs of a recovery and now analysts are predicting the nations largest mortgage lender may be left in the lurch by Bank of America.

The fate of Countrywide and their shareholders seems to be again falling on hard times. The countries largest mortgage lender, which agreed to be acquired by Bank of America earlier in the year is facing the potential of the deal falling through. On Friday, Bank of America indicated they were not obligated to Countrywides debt, sending off a fury of speculation that they may bail on the proposed merger all together. The real estate market has shown no signs of bottoming out and Countrywide has reported three straight quarters of financial losses as they continue to write down the balance sheet as foreclosed homes pile up. Many analysts fear that Countrywide which has a large exposure to sub prime loans, options arms, home equity loans and non agency mortgages will have to incur another twenty to thirty billion in write downs over the next 3 years. The losses appear to be staggering and clearly would be a concern for any investor who fears that the real estate market will continue to slide. Their have been some positive developments this year, aimed at helping the real estate industry. The economic stimulus package has begun sending out rebate checks, the fed has cut the fed funds rate down to 2% and both FHA and Agency lenders have made some radical changes. These moves have yet to show up in the real estate market, and if their is not a sign of a recovery beginning, their could be more potential fallout that would include the Countrywide merger.

5-6-2008 ? LoanNetwork.com





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