Reactions to Today's Bank of America/Countrywide Acquisition News
January 11, 2008 by Andy Kaufman · View Comments
Big waves continue to ripple across the mortgage & real estate industries, as people begin to digest the news that Bank of America agreed to buy Countrywide for $4.1 Billion in Stock.
I know what you’re thinking… $4 MORE billion after basically throwing $2billion down the drain a few short months ago. Don’t worry, they have a plan. They’re getting a little help from us taxpayers.
Huh?
That’s because Bank of America, which is solidly profitable, will be able to use some of Countrywide’s losses to offset its own taxable income. The tax break could total about half a billion dollars over the first five years, according to an estimate by tax guru Robert Willens, who left Lehman Brothers Friday after a 20-year run and will be in business as Robert Willens LLC starting next week.
Awesome, eh? At least the people responsible for creating this mess will pay dearly, right?
Think again, Countrywide CEO Anthony Mozilo is going to walk with a severance totaling $110 million and change.
Matthew at Blown Mortgage has a thorough analysis that I’d recommend checking out. As an REO agent, I found these points were of particular interest
The real question we all want to know is how bad is Countrywide’s loan servicing portfolio? Rumors creeping out on The Street is that Countrywide has a very serious REO problem they are not reporting as of yet.
In California alone, Countrywide’s REOs have risen from 2,361 to 4,051 – a whopping 72% increase in just seven months. What are these numbers gonna look like in 1-2 years? Any math geeks want to extrapolate that one?
Well, at least I know of a good team of REO listing agents. Memo to Bank of Countrywide America: check the contact info in the top right corner.
Continuing on…
Over on BloodHound Blog, Brian Brady argues Why Bank of America is the WRONG Buyer
BA is buying problems with this CFC acquisition. The CFC sales force will not mesh well with the button-downed arrogance the BA crew exhibits. My prediction? CFC originators flee the newly-formed entity in droves during 2008. Mortgage brokers will reject the new entity because of their lousy customer service.
Who’s perfectly positioned to benefit from this exodus? Why, Wells Fargo, of course.
Wells Fargo, the mortgage lender disguised as a federally-chartered bank.
Over on Mashable, Paul Glazowski take a different angle and explains how the news will affect the big tech ad networks
The figures comprising Countrywide’s contributions to the coffers of the abovementioned ad networks (Microsoft, Yahoo!, and, yes, Google) over the past few seasons are fairly impressive. According to a Nielsen/Netratings assessment for the month of August, Countrywide spent $34.77 million on online advertising. Several months later, the company, still on its fateful decline, was then found to have increased spending considerably. In November, Nielsen showed it to deliver a total of $57.6m in its marketing efforts on the Web.
& to lighten things up Paul Kedrosky cracks a funny, saying that
…why should I have more confidence that Ken Lewis and BofA have timed this infusion better than their last one? After all, since their $2-billion for 16% deal months ago the stock has fallen 50%. Let’s just say that as far as bottom-spotters go I put more faith in Sir Mixalot than I do in BofA’s Lewis & Co.
Ba dum bum ching!
graphic via The Mess That Greenspan Made
Bay Area Housing Forecast
January 1, 2008 by Glen Bell · View Comments
What’s in store for real estate in the Bay Area for the coming year?
Most in the real estate industry agree that it will get worse before it gets better. However, predictions vary among our “experts.” What are we in store for in 2008? When will prices begin to recover?
Hear what some of them are saying…
“Don’t count on market rebounding in ’08, experts say.” – Marni Leff Kottle of the San Francisco Chronicle.
“A real recovery in the housing market is probably at least a year off,” said Robert Kleinhenz, deputy chief economist for the California Association of Realtors.
California Association of Realtors’s forecast for 2008; sales volume will continue to fall, 9% in 2008, as will the median price of a home, at 4%. Take a look at the 2008 California Housing Market Forecast (CAR membership required) presentation by Leslie Appleton-Young, Vice President and Chief Economist for the California Association of REALTORS® (C.A.R.).
“The best guesstimate most can come up with these days on a residential housing recovery is that 2008 will be more than half over before housing prices even stabilize. Right now, it’s anybody’s guess as to when they will start to grow positively.” – Ryan Fuhrmann, an article printed in The Motley Fool.
It may take until the end of 2008 or beginning of 2009 for the market to hit bottom, said Mark Zandi, chief economist at Moody’s Economy.com.
“But the one thing that economists and real estate agents seem to agree on is this: As bad as it may get in the Bay Area, the region is weathering the downturn in the real estate market much better than most other places.”
“The housing market is fairly strong in the vast majority of the Bay Area,” said Ken Rosen, chairman of the Fisher Center for Real Estate at UC Berkeley. “It’s slipping a little, but it’s not the free fall you have in some parts of the country.”
“When you look at the rest of the state and even the rest of the country, the Bay Area has held up quite well,” said Larry Klapow, president of Coldwell Banker’s San Francisco Bay Area region. “The market has shown incredible resiliency.” – “So Long, ’07″
“Builder’s expect recovery in second half” – Jessica Saunders, East Bay Business Times. “At least two builders expect to see some recovery in the East Bay housing market in the second half of 2008, but another expert thinks it will be 2009 before demand and supply balance out.”
“Once we get through the credit crunch, and buyers realize the world didn’t end, they will come back,” said Scott Menard, SummerHill Homes’ chief operating officer, who predicts the market will continue down through at least the first quarter. “Next year will probably be a bit of an adjustment year.”
Which brings us to the question; Will 2008 be a good time to invest in real estate? See what a recent survey showed taken by the East Bay Business Times. 60% say that now is a good time to buy! Read their comments as to why.
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