Countrywide to Pay BoA $160M if Deal Fails

If Bank of America's planned purchase of Countrywide Financial Corp. falls through, Countrywide will have to pay the banking giant a termination fee of $160 million, according to new documents filed with the Securities and Exchange Commission. In the filing, the nation's largest lender notes that 71% of its payment-option ARM borrowers are making only the minimum payment allowed -- and that 80% of those adjustable-rate mortgages were originated as "stated-income loans" in which borrowers were not required to verify their income prior to closing. Countrywide warns that if it loses the investment-grade rating on its debt, the bank will be forced to disgorge $4.2 billion in custodial deposits. It also warns that if Fannie Mae and Freddie Mac reduce the volume of mortgages they buy from the lender, it "could have a material adverse effect on our results of operation and financial condition." Countrywide, based in Calabasas, Calif., can be found on the Web at http://www.countrywide.com.