Marketwatch says that Bank of America is in “advanced” talks to acquire Countrywide. No word on if said talks took place on Vader’s Star Destoyer or on Captain Hook’s pirate ship. Bank of America already bailed out Countrywide last year, chucking $2 billion into the troubled mortgage lender in exchange for preferred securities that could be converted into stock at $18. Countrywide is currently trading at around $7.75.

For Bank of America, an acquisition would be risky, but could generate big gains if the mortgage market were to stabilize, analysts said.
The bank is a leader in retail deposits and is also a big commercial lender and credit card issuer, but it hasn’t expanded as much in mortgages.
“The real question is whether Bank of America is comfortable enough with credit quality of Countrywide’s assets,” said Kathleen Shanley, an analyst at Gimme Credit.
“The potential payoff if things improve is very big for Bank of America,” she added in an interview. “Countrywide is the largest mortgage franchise in the country, and it’s a huge servicer. But we don’t know how long the mortgage downturn will last and how bad the mortgage losses will ultimately be.”
Countrywide has been hit hard by surging home-loan delinquencies and foreclosures. The shares have slumped almost 90% in the past year, and earlier this week the company was forced to deny market speculation that it was close to filing for bankruptcy.

Bank of America in talks to buy Countrywide: report [MarketWatch]

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