Boomer’s Blog

Bank of America Corp. expects to re-negotiate at least $40 billion in at-risk mortgages after it completes its long-anticipated acquisition of Countrywide Financial Corp. this quarter.

In March, BofA announced renewed plans to buy the slice of Countrywide it didn’t already have in an all-stock transaction worth about $4 billion. Soon afterwards, Countrywide announced that 34 percent of its subprime mortgages were delinquent by Q4, 2007, representing a steady rise from 21 percent in Q4 2006.

In August, BofA invested $2 billion in Countrywide, and earned a non-voting preferred security which yields 7.25 percent annually. The security can be converted into 16 percent of Countrywide’s common stock. Countrywide is slated to announce its Q1 earnings April 29.

BofA estimates that its efforts to re-work Countrywide’s troubled mortgages likely will enable 265,000 mortgage customers to keep their homes and promises it will let distressed property dwellers inhabit their locations for 60 days after foreclosure completion. After foreclosure, those who vacate within 30 days will get $2,000 for moving expenses.

Of the acquisition, the Motley Fool muses that, since the onset of the mortgage meltdown, Countrywide — the nation’s largest mortgage lender — has become synonymous with the subprime mortgage debacle, irresponsible lending practices and unscrupulous executives who miraculously manage to stay employed, despite their roles in decimating the housing market and the economy. Fool reporter Morgan Housel predicts that dropping Countrywide’s tainted moniker will be BofA’s first course of action when the acquisition deal is complete.