Sector Snap: Mortgage companies fall
NEW YORK --Shares of mortgage lenders fell Monday as analysts questioned whether Countrywide Financial Corp. should be sold for the original price announced in January, or if the deal is even worth completing.
Shares of Countrywide fell 90 cents, or 15.1 percent, to $5.08 in afternoon trading. Shares have traded between $3.95 and $42.24 during the past year.
Analysts with both Standard & Poor's and Friedman, Billings, Ramsey & Co. expect Bank of America Corp. to follow through on its acquisition of Countrywide, but said it could come at a reduced price.
FBR analyst Paul Miller suggested Countrywide might not even be worth buying anymore because of continued deterioration in the mortgage market even since the deal was announced.
In January, Charlotte, N.C.-based Bank of America agreed to purchase Calabasas, Calif.-based Countrywide for about $4 billion in stock. The deal is expected to close during the third quarter.
Miller said the deal price will likely be between $0 and $2. S&P analyst Kevin Cole pegs the price at closer to $6. Based on Bank of America's Friday closing price of $39.79, the deal values Countrywide shares at about $7.25.
Shares of Bank of America fell 90 cents, or 2.3 percent, to $38.89. Shares have traded between $33.12 and $52.96 during the past year.
Other mortgage companies shares fell as well, with mortgage lenders, purchasers and insurers declining.
Mortgage lender Fannie Mae fell $1.43, or 4.8 percent to $28.07. Shares of IndyMac Bancorp Inc. fell 27 cents or, 7.3 percent, to $3.41.
Among mortgage insurers, shares of MGIC Investment Corp. fell 60 cents, or 4.3 percent, to $13.30 and PMI Group Inc. shares fell 27 cents, or 4.3 percent, to $5.96. 