Bank of America to buy Countrywide for $4B

— -- The acquisition of Countrywide, now a symbol of the excess in the mortgage market that fueled the real estate bubble, catapults Bank of America from the No. 5 mortgage lender to No. 1. With Countrywide's enormous portfolio of loans and distribution system, Bank of America will soon originate one out of every four mortgages in the country.

"When the dust settles on this in two or three years, someone like Bank of America is going to be in great shape. And I don't think Chase or Citibank wants to wake up and see they've been left in the dust," said Guy Cecala, publisher of Inside Mortgage Finance, a trade publication.

Customers of Countrywide and Bank of America will see few changes before 2009, when the companies begin to combine some of their operations. But soon after, Bank of America may start offering credit cards and other products to Countrywide customers, and may put Countrywide loan officers in Bank of America branches.

The union also will have no effect on current borrowers mortgages from either lender. Bank of America and Countrywide will not make any future loans to people with tarnished or subprime credit.

"Over time it's going to mean less choice" for consumers, Cecala says. "No one is going to want to hear that. Countrywide was really out there in terms of having a breadth of mortgage products."

Rumors that Bank of America would acquire Countrywide have been getting louder since August, when Bank of America invested $2 billion for an 16% stake in Countrywide, which was reeling from losses on its subprime loans and the evaporation of interest on Wall Street for mortgage-backed bonds.