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Countrywide Financial Case

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Countrywide Financial was established in 1969 as a subprime lender for home loans. (Ferrell, Fraedrich, & Ferrell, 2013). Within 30 years, Countrywide Financial created over 16% of home loans, which placed them in a very good position as the largest source for home loans. They became the top subprime lender for minorities and low-income borrowers. In 1992, Countrywide developed a program that allowed more consumers to become eligible to receive home loans. In 2003, they revised their program to reach out to more minorities and low-income borrowers. Their strategy involved assistance programs for down-payments and closing costs, programs for rehabilitation loans, mortgage revenue bond, FHA and VA loans, multiunit loans, rural housing, …show more content…

They saw a huge increase of loans from minorities and low – to moderate –income earners. To encourage Countrywide’s market share, the salespeople received extra incentives to approve loans that were considered unsafe. By 2007, Countrywide noticed the heavy losses from their reduced profits, which developed from doubling of foreclosures. They had to lay off up to 20,000 of their employees. Countrywide tried to encourage their customers to refinance or adjust their loans so they can afford to make future payments to their existing loans. By the time they reached this level the damage had already been done. Over a half a million Countrywide customers had the strong potential to lose their homes through foreclosure (Ferrell, et al, 2013). In the summer of 2008, Bank of America purchased Countrywide along with their issues. These issues include current lawsuits and nearly $17 billion in debts. Bank of America planned to remove Countrywide’s subprime lending services and replace it with the lending services that they offer to their customers. Their revenue improved during the first quarter as a single company. They opened a quarter of a million mortgages for new customers that had an overall principal valued at over $50 billion, to include home-equity loans valued at $6

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