Countrywide just sent a co-worker a letter pitching a 40-year mortgage. Which had me thinking. If my co-worker had bought a 40-year mortgage 40 years ago, he would have been buying it one year before a young Angelo Mozilo opened up shop.
That mortgage would finally be paid off now, as Countrywide is about to be swallowed up. Can you imagine paying a mortgage for 40 years? But then, the way so many people refinanced over and over, maybe that was the plan.
Meantime, Countrywide reports CEO Mozilo is now entitled to a $10 million stock award in April under his employment contract, even as he earlier agreed to forego $37.5 million in severance upon leaving the company.
What is Countrywide worth? A huge new hedge fund investor in the company has upped its share of Countrywide stock. SRM Global Fund has purchased an extra million plus shares since first buying in a month ago, boosting its total ownership of Countrywide to 5.48 percent. Obviously, it thinks the company is worth something. In fact, it believes Countrywide is worth more than what Bank of America is willing to pay. SRM believes the book value of Countrywide is $20 a share, well below the approximately $8 BofA has offered. In a press release, SRM quotes from a article in Fortune by Shawn Tully on a January meeting with Bank of America CEO Ken Lewis:
"Last Tuesday, I met with Lewis at Bank of America's New York headquarters on West 57th Street, in a conference room boasting spectacular views over Central Park. During our talk, Lewis revealed his projections on the Countrywide transaction. As I suspected, they're extremely conservative, and even so, Lewis expects to recoup his investment so fast that, if he succeeds [in closing the deal], the deal will be a steal."
Legg Mason has also boosted its stake in Countrywide. It will be interesting to watch how these investments pan out.