Today, Bank of America announced that it would buy mortgage lender, Countrywide, for $4.1 billion in stock.
For some reason, I thought the largest sub-prime lender in the country would be worth more than this, but maybe this is just enough to make Bank of America the majority stakeholder in the company. Bank of America has already taken over large banks such as Fleet and MBNA, and now they’ll become the largest player in the mortgage industry. But this time, the company they are gobbling up has tons of headaches. There are thousands of pending foreclosures with Countrywide that will now by Bank of America’s problem. But, I am assuming that they are looking at the long-term picture once the market rebounds, and all is good in the world of mortgages.
I can tell you this, mortgages just got MUCH harder to obtain for many with less than perfect credit. Bank of America is going to weed out many of the applicants that normally would have found a mortgage home with Countrywide. The industry definitely needs to be cleaned up, but I worry about those hard-working Americans with two or three honest blemishes on their credit. I doubt that Bank of America will be doing much manual underwriting. So, what does that mean for the future of getting a mortgage?
Start saving right now! Don’t assume that you’re going to get 100% down on a mortgage anymore. Do what you can to clean up your credit report. Don’t worry about “credit score” tricks. Just make sure that your report is accurate. You can do this by going to Annual Credit Report. Make sure that you don’t go to www.freecreditreport.com! That is NOT the website that gives you a true, free credit report every year. It will sign you up for a free-trial and start charging you a monthly fee to monitor your credit report.