The biggest lender isn’t going under, but it is going under new ownership, and as goes Bank of America, so goes Countrywide. Call it the "clean-up of Countrywide."

Here’s the difference: Countrywide

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[CFC  Loading...      ()   ] was the everyman lender, out on the street, dealing with brokers, correspondents, promising everyone and their sister a loan with the kinds of products that are now coming back to bite them.

Bank of America

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[BAC  Loading...      ()   ] was far more conservative in its lending--trying to steer clear of risky loans and questionable borrowers. So now Countrywide falls under the BofA model.

What about jumbo loans, since the credit crunch has curtailed Countrywide's ability to do them? Well, some of my mortgage gurus are telling me this may open up the jumbo market for Countrywide, given that it now has all that BofA cash behind it. Bigger loans, better borrowers.

What happens to modifications? Countrywide has been really aggressive in helping troubled borrowers get out of loans they can’t afford. Does that change? Consensus seems to be no. BofA will restructure the loans that have to be reworked--maybe even better than Countrywide, some analysts say--and take their losses.

So what does this all really mean for the mortgage market? The 800 pound gorilla just got bigger and stronger. “No one is better positioned for tomorrow’s market than Countrywide with its deep penetration and hard core mortgage know how. When the market does stabilize, BofA/CFC will be poised to dominate,” says mortgage consultant Howard Glaser.

This deal won’t have any effect on mortgage rates on the street, and it’s not going to loosen up any of the tightened standards of the last six months, but it will provide more opportunity for loans in the future. Folks, we still have a ways to go.

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