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Last Updated: Thursday, 23 August 2007, 10:24 GMT 11:24 UK
US mortgage firm gets $2bn boost
The exterior of the Countrywide home loans office in San Mateo, California
Bank of America says Countrywide assets have been undervalued
Bank of America has made a $2bn (1bn) investment in US mortgage lending firm Countrywide Financial.

Countrywide Financial, the biggest US mortgage firm, has suffered in the wake of a US housing slowdown that has hit stocks and prompted market turmoil.

Borrowers with poor credit histories have defaulted on loans, as they struggle with higher interest rates.

But Bank of America said Countrywide's assets have been undervalued following recent volatility worldwide.

Share rise

"This investment reflects our confidence in their business and recognises the importance of the company in providing home financing across the country," said Kenneth Lewis, chairman of Bank of America.

Angelo Mozilo, Countrywide's chairman and chief executive said the move "strengthens our balance sheet enabling us to position Countrywide for future growth".

News of the investment sent shares in Countrywide more than 20% higher in after-hours trading to $26.25.

Last Thursday, Countrywide's shares fell to $15 - the lowest in a year - as stock markets reeled from the fallout of the crisis in the sub-prime sector.

The sub-prime sector covers loans made to people with poor credit histories or who may be on low incomes.

The market has seen rise in the number of defaults on loans as rising US mortgage rates have made it harder for homeowners to meet their debts.




SEE ALSO
Top US lender 'risks bankruptcy'
15 Aug 07 |  Business
Rising defaults hit top US lender
24 Jul 07 |  Business
Wall St hit by home payment fears
13 Mar 07 |  Business
US probes sub-prime mortgage firm
13 Mar 07 |  Business
Mortgage slide hits Countrywide
26 Jul 05 |  Business

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