Countrywide Financial Bankruptcy a Possibility for Bank of America

Countrywide Financial Bankruptcy a Possibility for Bank of America

Countrywide Financial, the distressed mortgage-lending arm of Bank of America, could file for bankruptcy, according to a leading stock analyst.Financial analyst Mike Mayo, who works for Credit Agricole, released a report this week saying the company might file for bankruptcy because it is still technically separate from Bank of America, according to a Wall Street Journal report. 

Bank of America acquired Countrywide Financial for $4 billion in 2008, at the same time picking up a much larger stake in the home loan industry than it had previously held. The bank’s mortgage portfolio is severely troubled at the moment, with more than 85% of its loans in danger of delinquency and a 50-state inquiry into the possibility of incorrect paperwork on foreclosures.

Faced with these problems, Mayo said bankruptcy could be a feasible option for the mortgage lender. His report said that the acquisition of Countrywide was responsible for most of Bank of America’s foreclosure issues, which are costing the bank public relations capital and actual revenue. The report also said Bank of America would have a strong disincentive to file for Countrywide’s bankruptcy because it could hurt the bank’s image. This disincentive made the bankruptcy option “a long shot,” according to the paper.

Countrywide Financial, now called Bank of America Home Loans, was a massive mortgage lender that was bought by Bank of America in 2008. At one point, Countrywide serviced about one-fifth of the nation’s home loans. Former Countrywide executive Angelo Mozilo and Bank of America recently settled a suit for $67.5 million for filing false documents with the Securities and Exchange Commission.

30 Responses

  1. Concerned

    Absolutely correct. And, the fault lies with the AGs for failing to enforce the settlement agreement that included the mods. Whoops – they took the money – and ran.

  2. A Southern California District court case to watch: CASE NO: 10-CV-2168-IEG (JMA)”.

    This case is only at the stage of acquiring a TRO with the argument for the Preliminary Injunction in front of Judge Irma Gonzalez scheduled for November 10th, 2010.

    In this case, the argument is raised that the homeowner was told to stop making payments and then after doing so, instead of being offered a modification WAMU acted to foreclose.

    I am reminded of a New Hampshire case in which CountryWide strung a couple along with promises for a greater period of time and then foreclosed. That case made the news in 2009. It was settled out of court. Think monetary settlement if not the house too.

    Now there are TWO groups that will find this current case of interest if it survives the next skirmishes:

    The first group is obviously all the other people who have suffered thru the process with ANY offender-pretender-lender and had them foreclose instead of modify the loan will want to compare this case to their own.

    The second group is ALL those tens of thousands of homeowners who were offered and ACCEPTED the so-called “CountryWide California AG Mods”. Remember the mods that our governor-elect was crowing about last year? Remember how THOSE ended up? The CA AG’s office would not help require compliance by CW or BofA with the settlement agreement they signed. CW/BofA ‘canceled’ ALL those mods that were offered under that stipulated agreement.

    Now, in addition to BK courts looking at those breached mods with curious interest, This SoCal District court may also look at those with CONSIDERABLE ire.

  3. Do you think they will break my legs since I’m not paying? I thought I had a right to know who I am Indebted too.

  4. While I can understand that B of A might like to threaten putting CW into BK as a not so veiled threat against investor put-backs, I don’t understand this next line of reasoning from WSJ blog:

    Mayo concedes a Countrywide bankruptcy filing is unlikely because of hits to its reputation and political fallout, but he says “the possibility exists that somebody at Bank of America could try to use a Countrywide bankruptcy as an ‘ace card’ as part of its negotiations.” (As in, stop bugging us about these botched foreclosure documents, or we’ll tip Countrywide into Chapter 11 and leave you to deal with the courts.)

    Can anyone explain what this means? Leave WHO to deal with the courts, the investors? I’m trying to get a grip on what a CW BK would mean to my CW loan, and I can’t figure out how the botched docs could be used as an ace card here. Comments anyone?

    http://blogs.wsj.com/deals/2010/11/02/could-bofa-push-countrywide-into-bankruptcy/

  5. Anonymous,

    Sorry, I had not been clear that I was referring to the income rights to the mortgage, not the actual mortgage.

    Do those contract rights being (potentially) forced back to CW have any impact on the CW BK other than to have far more liabilities show up for CW? This could put more pressure on the CW BK court trustee to pressure BK trustees for borrowers to dismiss cases, help advocate lift of stay or otherwise deny BK protection to borrowers.

  6. I am wondering how any BK by this ‘CountryWide’ entity could effect the foreclosure actions that were farmed out to other firms by CountryWide/BofA. CountryWide was the servicer. After default and a breached mod, debt-collection (oh, yeah, they call it servicing) is now in the control of Litton.

    Will investors in the pool need to get a court to force the BoNY-Mellon Trustee for the pool to make CW take the loan back, along with thousands of other loans or will the pool trustees suddenly see that they should push all the defaulted loans back so they get a share from the BK?

    Then for any borrower fighting using a BK, their own BK Trustee should deal with the CW BK Trustee?

  7. […] 6 Nov Countrywide Financial Bankruptcy a Possibility for Bank of America Countrywide Financial, the distressed mortgage-lending arm of Bank of America, could file for bankruptcy, according to a leading stock analyst.Financial analyst Mike Mayo, who works for Credit Agricole, released a report this week saying the company might file for bankruptcy because it is still technically separate from Bank of America, according to a Wall Street Journal report.  … Read More […]

  8. ANONYMOUS,

    You are absolutely correct that we are the laughing stock of the international community. Americans have always been viewed internally as a bunch of ignorants and we have now proven them right.

    Prominent economists, both nationally and internationally, have criticized the GOPs economic plans. The GOP flatly rebuffs Keynesian economics (you have to prime the pump in order to draw water). Instead the GOP has relied on fear and misinformation in order to push their candidates to victory in this mid-term election.

    The GOP was able to accomplish this because our President failed his people. He forgot those that elected him. He forgot that it was Main Street not Wall Street and his allegiance should be to the U.S.A., a nation of the people, by the people and for the people.

    One other problem is that American are used to instant gratification. They expected the economy to recover instantaneously and that is not how economies work. Economics 101 teaches you that there are 7 years of feast followed by 7 years of famine. Economies are cyclical – that is why it was wrong for the government to bail out Wall Street – the economy would have recovered with or without government intervention. Having said that, if the government wanted to intervene, then it should have been to the benefit of its people not to their detriment.

    By bailing out Wall Street, the government assured that the people would be shafted in the end. Wall Street was not going to do anything to benefit anyone but themselves.

    What we need are perp walks for all those who engineered the mass collapse of the economy. Bill Black and Randy Wray are absolutely correct in their articles. It’s time for JAIL OUTS not BAIL OUTS. We need to get this message delivered to our leaders strongly and clearly. We the People will not stand by and allow these criminals to continue their criminal activities just because they happen to have millions or billions of dollars. Bernie Madoff is mall fry compared to these guys – their arrogance is their downfall.

  9. Thank you Anonymous. They all hide behind so many different names, divisions, and affiliates.

  10. I may have missed it, but did anyone answer Zoe’s question? I would not only like to hear how it would effect us, but serious advice as to what we should/could do if anything?

    I have a Country Wide ‘Pay Option Arm’ pretitory loan.
    Country Wide is slime, but BofA is worse. These loans were supposed to be modified over two years ago, after signing a consent jusdement and accepting funding to do so.

    Bank of America purchased our loans for penny’s on the dollar, accepted funds from the state, (our tax dollars) from the Fed bail out, (again our tax dollars) and last but not least, the monthly payments, many being interest only. Chaching!!!

    Now they get to file BK? Unbelievable! Well, I suppose, since they have wrung every penny possible (legally or not)out of these loans, and have not come close to fulfulling their end of the deal, I suppose they are right. We should all feel badly about the “Image” the Almightly bank has most definitely EARNED!

  11. frankielee,

    Thanks franklelee – I never go anywhere – always here – just sometimes get low. I will never give up ——

  12. Anonymous,

    Yes, agreed. Nice to have you back. You seem to have gone off in a bit of despair. Please keep focused, I, we, need your help. You’re much needed here.

    These problems need all the solutions they can get.

  13. THE A MAN,

    Thanks for the video – we are being laughed at internationally.

    And, saw an even more frightening video from China on CNBC a couple of days ago.

    They know more than we are acknowledging here. THE BANKS ARE TO BLAME.. Our economy – for the past decade – has been driven by the banks concerted effort to siphon every dime out of America’s major asset – their home. Racketeering. And, now they are throwing the people and their children out onto the street. No wonder other countries are laughing.

    But the old boy network lives on in Washington.

  14. frankielee

    Exactly – – “The original sin of Obama’s presidency was to assign economic policy to a closed circle of bank-friendly economists and Bush carryover – Larry Summers. Timothy Geithner. Ben Bernanke. Sheila Bair ” and please add Mr. Henry Paulson.

    This is what happened – knew when these got involved – we were dead meat. Now have to work harder to undo what they have done.

    Kickboxer yes they are the same – and do not let anyone fool you – Bank of America purchased the Countrywide loans – before they purchased the company. None of the originators kept their loans – all were sold to the banks – and THEN the BANKS securitized the receivables to the loans they OWNED.

    When is anyone going to get it??- it is very simple – THE BANKS BOUGHT THE LOANS FROM THE ORIGINATORS – THE BANKS OWN THE LOANS – THE INVESTORS DO NOT OWN THE LOANS — THE BANKS ARE FORECLOSING ON YOU. BOA BOUGHT COUNTRYWIDE LOANS – BEFORE THEY BOUGHT COUNTRYWIDE- THE COMPANY.

    THE BANKS ARE RESPONSIBLE – NO ONE ELSE. And, the government has protected them from all.

    All the foreclosures are fraudulent because the banks have allowed “investors” to misrepresent that they own the loans – the BANKS are foreclosing – not the investors. Trustees have no business in foreclosure court. Trusts will not receive foreclosure proceeds.

    Have to focus – anything else is just helping the banks continue their fraud. It is not as complicated as some think it is. The banks are responsible. The banks bought the loans. The banks are committing foreclosure fraud. The banks are giving bogus loan mods – or no mods at all. The banks have totally messed up mortgage title. The banks have committed insurance fraud. The banks – are protected by the government – Democrats and Republicans alike – because – the banks are in trouble and pay politicians to help them. We are scapegoats. And, if no one stops the banks – and stops the foreclosures and fraud – the banks will pull down the whole country. Bernanke’s gimmicks will not hold water in the long run.

  15. Folks, that last piece says it all….how we were sold down the river for the banks and their lobby. As has been said many times here over the last few days and weeks and months, we need to start demanding this change. Bill Black has the answer. We need to frame his answer into the questions that are aimed at our so called reps in D.C., as well as at the state level. And they must answer correctly. Aisle side doesn’t matter. Don’t let them think they can wait for 2012. We need answers and resolve now.

    Belly up to the bar or get your ass out of town reps. Plain and simple.

  16. James K. Galbraith, the author of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too. He teaches at The University of Texas at Austin.

    Obama must break his devil’s pact with the banks in order to succeed.

    ~snip~

    The original sin of Obama’s presidency was to assign economic policy to a closed circle of bank-friendly economists and Bush carryovers. Larry Summers. Timothy Geithner. Ben Bernanke. These men had no personal commitment to the goal of an early recovery, no stake in the Democratic Party, no interest in the larger success of Barack Obama. Their primary goal, instead, was and remains to protect their own past decisions and their own professional futures.

    ~snip~

    But one cannot defend the actions of Team Obama on taking office. Law, policy and politics all pointed in one direction: turn the systemically dangerous banks over to Sheila Bair and the Federal Deposit Insurance Corporation. Insure the depositors, replace the management, fire the lobbyists, audit the books, prosecute the frauds, and restructure and downsize the institutions. The financial system would have been cleaned up. And the big bankers would have been beaten as a political force.

    Team Obama did none of these things. Instead they announced “stress tests,” plainly designed so as to obscure the banks’ true condition. They pressured the Federal Accounting Standards Board to permit the banks to ignore the market value of their toxic assets. Management stayed in place. They prosecuted no one. The Fed cut the cost of funds to zero. The President justified all this by repeating, many times, that the goal of policy was “to get credit flowing again.”

    Read the entire piece here:

    http://www.nakedcapitalism.com/2010/11/obama%e2%80%99s-problem-simply-defined-it-was-the-banks.html

  17. Just like pelucheven said, STOP USING THEIR CREDIT CARDS AND CLOSE ALL YOUR ACCOUNTS ……that’s the only way to get these thieves shut down….There are too many credit unions out here that are much better than these banks…..That’s all I bank with are credit unions and it’s never been a problem with them.

  18. But wait just one minute! We were told by the banking lobby and their senators in 2005 that bankruptcy was just plain wrong and way too cheap and easy, and they bought new legislation making it much more expensive, less effective, and more importantly, disallowed any effective means of release from one’s housing problems i.e., no writedowns of mortgages.

    Can if be that B of A is….please don’t tell me….is Bank of America going to go the morally hazardous route and do what they legislated out for individuals just a few short yeras ago? Can it be that they have, written into their own paid for bankruptcy laws, which I’m sure are different from the peasantry rules, escape clauses for stupendous and idiotic behavour on the part of banking institutions? Tell me it isn’t so!

    Their cutting loose from CW is simply an attempt, and one that they’ll probably get a way with thanks to their helpers in the senate, at dissing all of the repurchase attacks that are heading full steam at them. A curse upon them. They have their laws, and we have none. Die Wall street! Die!

  19. This is our image around the World. Bank Of Amerifraud
    etc..

    This is a youtube in Taiwan

  20. Are “Countrywide Financial” and “Countrywide Home Loans” the same?

  21. GOOD

  22. If they file a BK, you need to register your claim with the US trustee and the BK COURT, ASK A BK ATTORNEY.

    BOA WILL SET UP ANOTHER PREDATORY ENTITY AND TRANSFER THEIR DATABASE AND VICTIMIZE THROUGH OTHER CHANNELS

  23. Today, I stopped at a BOA branch in Springfield VA, the manager told me they are very worried about the bankz image, about what their organization has done so far.

    The morale is really low, they know their bosses are lying, their clients are bouncing checks like crazy, their deposit average has come down, people are walking in angry, they are telling the managers to smile, yo greet, to do whatever necessary to make peace.

    stop banking with these thieves

  24. I have one of the CW loans from 2006, and I would like to know how this would affect homeowners in the event of bankruptcy. Anyone venture to guess?

  25. close your accounts with the bankers and stop doing business with any one who is doing business with any bakster or pretender lenders, send them a message the undedstand, since abiding by the law, transparency and honesty are not part of their vocabulary.

    let us stop using their credit cards, let us move our money to our local banks and credit unions

  26. Countrywide will file a new special BK just for them. The regular rules don’t apply to them! Watch and see

  27. Bill-

    Key issue is not Lying to the Public, Key issue is lying period, which is just a symptom of operating from a moral hazard mindset.

    Don’t care about ‘public relations’ as this is always a spin on the truth anyway.

    How about a boycott till we see concrete evidence of a moral compass pointing in the right direction?

  28. http://www.youtube.com/watch?v=KLvGGm4dqoQ&NR=1

    Chris Whalen defines the housing problem and a logical solution that should make everybody happy. It’s a logical answer for the short run, while the courts and feds investigate and sort things out. Mainly it will put money back into our cities and states, keeping our neighborhoods from going to hell. It gives families a chance to save or get back a home.
    REIT’s are what we need to bring back, and the cities, counties or states should run these programs.

  29. Lying to the Public….
    Why do we put up with it?
    Lets boycott them, till they clean up their ‘public relations’.

Leave a Reply

%d bloggers like this: