Bloomberg recently reported Bank of
America Corp (BAC) insiders have leaked the bank might consider
filing bankruptcy for its Countrywide Financial Corp. unit should the
litigation cost threaten to cripple the parent organization, BAC.
BAC is based in Charlotte, North
Carolina, and after acquiring Countrywide Financial Corp., has
maintained the acquisition as a separate entity. Apparently,
Countrywide has sold faulty loans, for which they have been sued. An
analyst with Credit Agricole Securities USA has booked at least $30
billion of cost for faulty home loans, most of which were sold by
Countrywide.
Back in 2007, Countrywide was the
largest mortgage originator in the United States, with 17 percent of
the market. It is questioned as to whether Bank of America has
enough reserves to pay claims. One of the claims were filed by the
Federal Housing Finance Agency, which sued BAC and 16 other banks to
recover $200 billion in mortgage-backed securities sold to Fannie Mae
and Freddie Mac (the article list as Freddie Mae).
Countrywide has $11 billion in assets
that could be depleted through demands to repurchase defective
mortgages.
You can find the entire article at
http://www.bloomberg.com/news/2011-09-16/bofa-said-to-keep-bankruptcy-as-option-for-countrywide-unit.html?cmpid=bit
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