Three weeks after the Federal Reserve approved the merger of Countrywide Financial Corp. and Bank of America Corp., shareholders of the troubled mortgage lender are expected June 25 to give their blessings to the $3.3 billion deal.

Hundreds are expected to pack an auditorium at Countrywide’s Calabasas headquarters to decide whether to exchange nearly six of their shares for one share of the nation’s second-largest bank by assets.
According to company documents to shareholders, Countywide’s board suggests approving this deal, citing worsening credit performance, funding limitations, declining mortgage origination and the national price pressures on residential real estate.

Despite continued fallout at Countrywide – senior executives under investigation, billions in bad loans and admitted preferential loans for politicians – Bank of America said it continues to support the merger.
Bank of America Chief Executive Officer Kenneth Lewis has called the Countrywide purchase “a bet on the U.S.,” because it will provide gains even if U.S. home prices drop another 25 percent by 2010.

Taking over Countrywide, which all but collapsed under the sub-prime mortgage crisis, will give Bank of America nearly a quarter of the mortgage market in the world’s biggest economy, Lewis said. BofA will profit from fees tied to Countrywide’s $1.5 trillion business, handling mortgage billings and collections, he said.
Some analysts, however, are skeptical, saying Charlotte, N.C.-based Bank of America may need to write down as much as $30 billion in Countrywide’s loans, due to plummeting home prices.
Lewis defended the decision, saying: “We think the upside is pretty nice.”

Mozilo’s policy

But Countrywide has been plagued with constant headlines during the past fortnight regarding outgoing chairman Angelo R. Mozilo’s policy of providing attractive loan terms or lower rates to influential politicians, often without their knowledge.

The latest Washington insiders to claim no idea of receiving preferential treatment were Sens. Kent Conrad, D-Neb., and Christopher Dodd, D-Conn., who oversees the U.S. mortgage industry as chairman of the Senate Banking Committee.

Dodd, who sought the 2008 presidential nomination, said at a news conference in Washington that he was told in 2003 that he was being placed in the company’s “V.I.P” program.

A week earlier, James Johnson resigned from Democratic presidential hopeful Barrack Obama’s vice presidential screening committee after his involvement with Countrywide was disclosed.
Johnson, who introduced Conrad to Mozilo during an unexpected phone call, had himself received attractive loans from Countrywide, which is part of a federal investigation tied to the national sub-prime mortgage debacle.

Johnson is former chairman of Washington, D.C.-based mortgage lender Fannie Mae.
Back in Countrywide’s backyard, officials in Simi Valley and Thousand Oaks – which houses Countywide’s loan servicing operations and is headquarters for Countywide Bank, respectively – say uncertainty regarding the upcoming merger has hardly been noticeable.

Simi Valley City Manager Mike Sedell said it appears the same number of cars show up daily at the parking lots for Countywide, which remains the city’s leading employer.

The 39-year-old lender employs more than 4,000 people Ventura County – 2,200 fewer than last year – and owns and occupies four buildings with a total of about 750,000 square feet. Countywide leases an additional 100,000 square feet in another building in Simi Valley and purchased a similarly sized warehouse years ago from the defunct Bugle Boy Jeans concern, which it originally planned to convert into office space. Sedell said the city has continued to send a message to Countywide and BofA executives that the combined firm’s continued presence is welcome in Simi Valley, while extolling the value of its stable and talented work force.

Leigh Nixon, chief executive officer of the Simi Valley Chamber of Commerce, said fears of Countywide being swallowed by BofA leading to wholesale layoffs and retrenchment have, so far, proven unfounded.

No effects yet

“We haven’t seen the effects of it yet,” Nixon said. “There have been some trickle-down effects, with some layoffs, but that could just be because of the overall downturn in the economy. We’re kind of in a ‘watch mode’ and monitoring it to see if they make any changes.”

If chamber membership is any indication, there is near zero fear within the business community. Nixon said her organization’s roster has added more than 100 new members since the merger was announced Jan. 11.
For Westlake delicatessen co-owner Marc Hernandez, the orders keep coming from Countywide employees and lots of other folks as business has been up by double-digits from last year.

Brent’s Deli, on Townsgate Road next to the Hyatt Westlake Plaza, is approaching two years of operation and business has steadily grown, Hernandez said, adding that both the sit-down and catering sides of the business are strong.

“We still, to this day, do catering to Countrywide,” said Hernandez, who oversees a satellite of the famed Northridge deli of the same name. “We’re doing about as much as we’ve always done.”
Scott Mitnick, city manager in Thousand Oaks, said his town is even better insulated from possible Countrywide cutbacks.

Countywide Bank N.A., one of the mortgage lender’s remaining profit centers, has its headquarters on Hillcrest Drive in Thousand Oaks near Ventura County’s most profitable shopping venue, The Oaks mall. Mitnick said the city has been assured that operation should not see much change and that the lender’s name should remain atop the Thousand Oaks Civic Arts Plaza’s Countrywide Performing Arts Center.

But Mitnick acknowledged that even one lost job can be devastating to the affected worker.
“While there’s no empirical evidence that the Countrywide situation is having a negative impact on Thousand Oaks’ local economy, at the same time the city feels for those families that are directly impacted.”

One such worker is Linda Martins-Mann, a Countrywide employee since 1998 who was laid off in March after being transferred from data entry to processing loan foreclosures earlier this year.

“When I first started it was great. It was my first office job. I loved the experience and what I was learning,” she said. “Toward the end, though, I began making myself all stressed out. When it came to them letting me go, I was sad because I liked the department, but I felt a great amount of release, like a great stress was lifted off of me.”

The Simi Valley resident, who was married last September, said it’s been difficult securing a new job. However, she’s about five months away from wrapping up her bachelor’s in marketing/communication at University of Phoenix.

Ironically, when Martins-Mann applied for a job in Countrywide’s marketing department this spring she received an e-mail reply saying she didn’t have enough experience.