Bank of America buys out Countrywide Financial

This acquisition is another major investment for Bank of America who has spent more than $100 billion since 2004 becoming the second largest bank.

This purchase provides a lifeline for Countrywide. The largest U.S. mortgage lender in the news lately due to mounting losses and defaults, a loss of access to credit markets, and lawsuits and regulatory probes into its lending practices and Chief Executive Angelo Mozilo’s sale of shares.

Bank of America’s purchase values Countrywide stock at $7.16 per share, a 7.6 percent discount to its Thursday closing price. Countrywide shareholders would receive 0.1822 of a Bank of America share in exchange for each of their shares.

Bank of America now ranks fifth in mortgage lending, according to the newsletter Inside Mortgage Finance. The new loans that Bank of America will obtain from Countrywide would give them close to one-fourth of the existing US mortgage loans. This number is roughly twice as large as that of Wells Fargo, which ranks second.

To read more about BofA makes risky bet with countrywide deal head on over to CNBC.