by Brian Brady
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
WARNING! Long commentary about the Bank of America/ Countrywide merger ahead:
Bank of America Press Release from July 1, 2008 (italicized) with my commentary:
CHARLOTTE, N.C., July 1 /PRNewswire/ — Bank of America Corporation today completed its purchase of Countrywide Financial Corp. to create the nation’s leading mortgage originator and servicer.
Bank of America will focus on responsible home lending, serving as a reliable source of mortgages for the American consumer. Bank of America also will assist new and existing customers with selecting the right product to meet their needs.
Bank of America fires a proactive shot with this statement to exempt its originators from proposed national registration and licensing. I think they’ll get the exemption. I predicted that the merger/rescue of CFC would be brokered by Ben Bernanke and that BAC would call in its chit, one day. Expect BAC to lead the borrower suitability trend. By setting itself up as the “leader” they can effectively eliminate competition by crying that the “innovative mortgage products” just aren’t suitable for Ma and Pa. This paternalistic approach will work for the next 2-3 years and BAC will have an unfair competitive advantage by fiat….but, they’ll blow it.
“Mortgages are one of the three main cornerstone consumer financial products along with deposits and credit cards,” said Bank of America Chairman and Chief Executive Officer Kenneth D. Lewis. “This purchase significantly increases Bank of America’s market share in consumer real estate, and as our companies combine, we believe Bank of America will benefit from excellent systems and a broad distribution network that will offer more ways to meet our customers’ credit needs.”
BA management are bankers, not mortgage bankers. It helps that mortgage bankers are a profession akin to drug dealers and pimps today. Public perception will be that the mortgage bankers blew up the economy and that the bankers can save it. Wells Fargo (a mortgage banking firm DISGUISED as a bank) will quietly steal MORE market share in the retail and wholesale mortgage origination market.
As previously announced in April, Bank of America plans to offer the following types of first-lien mortgages: conforming loans underwritten to standard guidelines of Read more