Investing in distressed assets, of course, can be extremely profitable. But Mr. Lewis’s shareholders have a right to be nervous about the deal, analysts say. As the nation’s largest home lender, Countrywide stands at the center of the mortgage storm and is being buffeted not only by woeful financial results but also by intense scrutiny from state and federal regulators. Bankruptcy judges have become vocal about what they consider dubious tactics taken by Countrywide against troubled borrowers.
“It’s a lot to ask Bank of America shareholders to stomach,” said Mike Larson, a real estate analyst at Weiss Research in Jupiter, Fla.
Countrywide is not only one of the biggest lenders in California and Florida, states that have been hit hard by the housing crisis, he said, it also has a large portfolio of home equity lines of credit and an especially risky type of adjustable-rate mortgage known as the option ARM. “It shows that the company is vulnerable to many geographies and loan types that are showing the worst performance,” Mr. Larson said. “It raises a real question about the logic of the deal or the deal at current terms.”