Dallas, TX – Zeeble: The collapse of subprime loans crippled Countrywide Financial, the nation's largest mortgage lender. News Reports said it was close to bankruptcy this week. Now, the nation's largest consumer banker, Bank of America, itself a huge mortgage lender, has agreed to buy Countrywide, essentially bailing it out. The Dallas Business Journal says in 2006, Countrywide made 34 thousand north Texas mortgage loans, leading all lenders. SMU Cox School of Business lecturer Michael Davis says if you have a Countrywide mortgage, this deal shouldn't matter.
Mike Davis, SMU: If you're a mortgage customer and pay on time you might not even notice. There may be a different address where you send your check, or where pay online.
Zeeble: Davis says in time, you may notice more solicitations from the Bank of America, for credit cards, home loans, and other services. That's one place he says Bank of America might make money off this deal, but it's still risky.
Davis: Bank of America thinks they'll make money by going to mortgage customers & selling them new financial services. That may happen, but if not, there may not be much profit. Countrywide could be worse off than they thought, and could be a sicker elephant than they thought.
Zeeble: There's also regulatory hurdles before this deal goes through, but Davis thinks officials will approve it, to prevent what could be Countrywide's devastating bankruptcy. The Dallas Business Journal's Associate Editor Chad Watt says those who might suffer the most from the buyout are Countrywide's Richardson workers.
Chad Watt: The mortgage industry is a commodity industry driven by volume and when volume decreases, companies have to find ways to cut costs. The only way they can make money on this is to find efficiencies and unfortunately in this line of work, that ll probably be done at the cost of jobs.
Zeeble: For now, no one's saying if Countrywide jobs might be lost, or how long it might take before federal officials approve the deal, assuming they do. Bill Zeeble KERA news.