Bank of America could face write-downs of up to $30 billion if it buys Countrywide Financial as planned and should instead ‘completely walk away’ from the deal, say analysts with investment bank Friedman, Billings, Ramsey & Co. The report cited a weak investor market for loans for sale amid slumping home prices.

The report today follows a couple of bombs last week. Bank of America on Thursday said in a filing it’s not promising to guarantee debt of Countrywide. After that, Standard & Poor’s quickly moved to downgrade Countrywide’s debt to junk.

Friedman, Billings said in its report that Bank of America’s filing last week “is most likely the first step in renegotiating the entire deal.” Currently, BofA is offering $4.1 billion for Countrywide ($7 per share).

Paul Miller, and two others from Friedman, cut their rating on Countrywide to “underperform” from “market perform” and lowered their price target to $2 a share from $7. Its stock dropped about 15 percent Monday to about $5 a share.

Bloomberg reports that Bank of America spokesman Scott Silvestri declined to comment. Countrywide spokeswoman Jumana Bauwens didn’t return a telephone message.

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Posted in: Bank of America • Company Watch • Countrywide • m&a • subprime |

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