Originally known as Countrywide Credit Industries, Inc., the
company underwent two name changes, changing its name to
Countrywide Financial Corporation in November 2002 and being
rebranded as Bank of America Home Loans in 2009 after operating as
a subsidiary of Bank of America Corporation since July 2008.
The company provides multiple services, including home loans;
refinance mortgage solutions; home equity loans and home equity
line of credits; home loans for new home purchases, as well as
second, vacation and investment homes; reverse mortgage products;
and multifamily and commercial loans.
In 1969 Angelo Mozilo, who began his career as a 14-year-old
messenger for a Manhattan mortgage company, and David Loeb launched
their own mortgage company, Countrywide Credit Industries.
Before the year's end, Countrywide went public, trading at less
than $1 per share. The offering did not raise much capital,
but undeterred, the two New York bankers left the Big Apple
thereafter and opened an office in Los Angeles amidst a booming
housing market. During its initial years in business, the
company offered Federal Housing Administration and the Veterans
Administration loans through a commissioned sales force.
Countrywide has always focused on the multicultural community and
is the largest lender to minorities, including being the top lender
to African Americans, Hispanics and Asians, as well as the leading
lender in low- to moderate-income communities.
However, the firm's founders believed that its existing business
model did not provide the proper type of customer service and
decided they needed to move in a new direction. Over lunch
one day, the two came up with a model that would revolutionize the
way they do business. Namely, the company would open branch
offices without sales people where customers could receive retail
bank-like service. The first branch was opened in 1974 in
Whittier, Calif. Over the next 10 years, loan production and
branches grew steadily, and by 1980, there were 40 Countrywide
branches in nine states. Eventually, the firm further
expanded lending operations into conventional loans that could be
sold to Fannie Mae and Freddie Mac. Growth continued, and
Countrywide rose up in the ranks of mortgage lenders in the United
States. In 2006, the company became the first mortgage lender
to surpass $1 trillion in servicing.
Thousand jobs slashed
By the third quarter of 2007, Countrywide had to admit that its
losses were significant enough so that in order to pull the company
out of the looming shadow of bankruptcy, it would have to cut some
of its workforce. In September 2007, it did more than just
lay off â€œsomeâ€ employees. Countrywide announced that in
the next three months, it would trim its labor force by 10,000 to
12,000 jobs. At the time of the announcement, this number
represented approximately 20 percent of Countrywide's 60,000
employees. The layoffs were directed at mortgage underwriters
and back-office operations, leaving those in the banking and
insurance divisions relatively unscathed.
After it became apparent that Countrywide was in dire straits, many
investors became understandably upset about the company's
misrepresentation of its financial stability. Five separate
lawsuits were filed, and in December 2007, a federal judge
consolidated them all together and appointed New York's Common
Retirement Fund and New York City Pension fund as the lead
plaintiffs. The company's third quarter losses were $1.2
billion, and the stock price had lost nearly 75 percent of its
value in the past year. At the time that the consolidation of
the lawsuits was announced, the stock was trading at $10.68, far
lower than its 52-week high of $45.26. As if the losses faced
by the company were not enough, Bank of America reported a net loss
of $1 billion for the third quarter of 2009 which was somehow
offset by its $6.5-billion net income.