Bank of America in talks to buy Countrywide

Bank of America in talks to buy Countrywide

NEW YORK (Reuters) - Bank of America Corp, the second-largest U.S. bank, is in advanced talks to buy Countrywide Financial Corp, the largest U.S. mortgage lender, a person familiar with the matter said on Thursday.


Neither company immediately responded to requests for comment.

It was not clear how quickly a merger might take place, but it could occur soon, The Wall Street Journal reported, citing two people familiar with the matter. The newspaper earlier reported a possible merger.

Countrywide has been struggling with the U.S. housing slump, and on Wednesday said foreclosures and late payments among home loans for which it collects payments rose to the highest levels on record in December.

"Somebody is going to have to absorb the massive losses in right-positioning Countrywide," said Sean Egan, managing director of credit-rating firm Egan-Jones Ratings Co. "It can be done, but the cost is going to be exorbitant. From Countrywide's perspective, it is their best chance for salvation."

In August, Bank of America invested $2 billion in Countrywide, buying preferred shares convertible into stock at $18 per share.

Countrywide shares rose $2.52, or 49.2 percent, to $7.64 in afternoon trading, after earlier rising to $8.91. They remain far below their record high of $45.19, set last February 2.

REUTERS