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We talked recently about the rewards and risks inherent for any company that would acquire Countrywide Financial (CFC). Now that Bank of America (BAC) unsurprisingly made the move, we'll talk a little more on how it will affect them.

The details of the purchase itself was Bank of America bought Countrywide for about $4 billion in stock. That's approximately a third of the book value of Countrywide, and about 2.9 times what the projected earnings for 2009 are, according to Chief Financial Officer Joe Price.

To give you an idea of how good a deal that is, usually lenders are bought for about one times book value and an additional seven times projected future earnings. With the risk involved with Countrywide though, especially short term risk, there was no way they were going to go for anything like a usual price.

What Risks did they take on?

I don't think there's any question over the long term that this is a huge win for Bank of America, the problem is the short term risks involved could end up lasting longer than expected, which would put a lot of pressure on the company leadership.

At this time nobody knows the depth of the problem, simply because there's no way of knowing how many people will eventually put of paying their loans or go into foreclosure. It seems every day new data comes out, the numbers keep getting higher.

Other than those obvious risks, there are other significant risks as well. Every problem Countrywide had was included with the purchase price of the company.

Litigation

For example there are a significant number of subprime mortgage lawsuits that have been surging against Countrywide, and they are now Bank of America's problem.

Pay Option ARMS

Included on Countrywide's balance sheet  is $27 billion in "pay option" adjustable rate mortgages. Consumers can decide to pay less than their minimum monthly payment on these types of loans. If that were to happen, the principle would grow, which would cause equity to decline.

Second-lien Home-Equity Loans

Also in Countrywide's loan portfolio is $32 billion in second-lien home-equity loans. Loans like this of course are behind the first-lien loans on a home, which could end up in possible losses also.

There are other risks, but these are the most prominent.

So was the price Bank of America paid for Countrywide a bargain. Yes and no. Short term they're going to suffer some pain, and depending on how deep and long that pain is and lasts will determine the response of shareholders. This was what was built into the "bargain" price paid for the company.

Now over the long term, this should definitely be a big winner. Bank of America has wanted to increase its presence in the mortgage market, and they have. With Countrywide under their umbrella, they are now the largest mortgage company in the U.S.

Most people understand the short-term risk involved with Countrywide, where problems will arise will be if the length of time it takes to fix them takes a lot longer than expected - which is a very real possibility. At that time the pressure will begin to mount on the wisdom of the deal.

If the company can hold strong during those times and resist doing anything that can hurt their long-term prospects, eventually shareholders should love what they've done by getting Countrywide.