The Jan. 11 sale of the country’s largest mortgage lender, Countrywide Financial Corp., to one of its largest financial institutions, Bank of America, will reshape the nation’s lending landscape.

“Countrywide and Bank of America were the two largest lenders. Now, one out of four loans will be done by Bank of America,” said Brian Koss, managing partner at Mortgage Network in Danvers and Countrywide’s former New England senior vice president.

That scares consumer advocates such as the Service Employees International Union, which released a statement on Jan. 11 expressing fears about excess “consolidation of the nation’s banking industry,” which, it said, “would inevitably result in concentrated economic risks” for consumers.

But local lenders that once sold loans to Countrywide, competed with its banking arm for deposit dollars or are interested in wooing its former customers welcomed the news that Bank of America will purchase the 39-year-old, California-based lender for $4 billion.

“As with any merger, there will be some dissatisfaction and some dislocation of customers,” said Robert Lavelle, senior vice president for lending at Middlesex Savings Bank in Natick. “That should present some opportunities for us.”

“To the whole financial industry, this is welcome news,” added Sushil Tuli, president and chief executive officer of the $200 million, Arlington-based Leader Bank. Rumors in early January that the lending giant was on the verge of going under made Tuli and other lenders nervous, he said, because if Countrywide declared bankruptcy, the institutions that sold loans to its correspondent division would have been obligated to fulfill the loan terms for customers whose loans Countrywide would have funded.

Leader Bank and its sister company, Leader Mortgage, which Tuli also owns, have sold some 15 percent to 20 percent of their loans to Countrywide.

Tuli’s companies also have locations or do lending in Burlington, Woburn and Waltham, which are communities where Countrywide Bank has its own offices, or “deposit generation centers,” as Tuli calls them because, he says, they are not full-service branches. Countrywide’s certificate of deposit rates, which rose to nearly a full percentage point above market rate during the past two years – especially recently, when the company needed deposit dollars to help fund its struggling loan business, as Wall Street investors pulled out – hurt nearby local banks when their depositors took money out to buy Countrywide CDs, he said.

“Bank of America is now known to pay the highest rates on CDs,” Tuli said. He hopes that with the pending merger between these two top rate competitors, the upward pressure on rates may ease somewhat in the months ahead.

The merger isn’t expected to be complete until the third quarter, but by this time next year, Tuli predicted, all of Countrywide’s local bank branch offices will be closed.

At NE Moves Mortgage in Waltham, President William Mullin said the merger will create an “enormous entity” but he’s not worried about competition.

“As a combined entity, they will probably lose a little market share,” Mullin predicted. Not the least of the potential pitfalls of such a large-scale merger is the two institutions’ vastly different cultures, he said.

NE Moves sold $186 million in loans – about 12.5 percent of its portfolio – to Countrywide last year, Mullin said, but none to Bank of America, which has shifted away from correspondent lending and announced in October it would exit the wholesale lending business entirely, to concentrate on retail.

Countrywide could follow Bank of America’s lead and exit the correspondent and wholesale loan areas as well, Mullin and others said. Job losses in Massachusetts already are high, with Countrywide having surrendered all 156 of its home loan office licenses last year, most at the end of December, according to David Cotney, chief operating officer at the state Division of Banks. However, Countrywide Bank still has at least seven bank offices in the state.

Even if Countrywide’s correspondent loan division closes, there will still be plenty of takers for loans formerly sold to them, Mullin said.

“We could sell to Wells Fargo, Mortgage Network, Citimortgage Â… there are plenty of other options.”

Koss, of Mortgage Network, said he thinks the “story of 2008” will be that for the first time in several years, there will be a balance between the right amount of available mortgage volume and lenders and brokers to service it.

“At Mortgage Network, we didn’t do much with Countrywide, so it’s not a big deal for us,” he said.

But Richard Shapiro, principal at Asset Mortgage Group brokerage in Natick, said he was “concerned” with the fact that Bank of America already has shut down its wholesale and correspondent lending arms, because many of the wholesale lenders his company does business with sell to Countrywide.

Shapiro said he’s worried that Bank of America could decide to shut down Countrywide’s correspondent sector, as well.

‘Incredible Decline’

The Bank of America-Countrywide combination no longer will offer subprime loans. Non-conforming loans, including jumbo mortgages, pay-option adjustable-rate loans and stated-income loans – many of which were subprime – represented about half of Countrywide’s business, said Barry Thomas, branch manager at Amerihome Mortgage’s local office in Burlington.

About 10 percent of Countrywide’s business was in second mortgages. Because of their relative risk, however, such loans virtually disappeared from the market, Thomas said. Second mortgages are subordinate to first mortgages and thus are at greater risk of not being paid in cases of default or foreclosure.

The rest of Countrywide’s loans were in the “very competitive” pool of those backed by government insurers such as Fannie Mae or Freddie Mac.

With Wall Street investors now shying away from mortgage-backed securities, that left Countrywide – with its huge investment in that market – in a very difficult position, Thomas explained, opening the door for the Bank of America buyout.

Future borrowers who might have taken out those riskier loans are out of luck for now, said Wellesley College economics professor Karl Case, a real estate market expert and co-creator of the Case-Shiller House Price Index.

“The borrowers of tomorrow better have good credit,” he said.

The question on his mind is whether Bank of America will be better off, in the future, with its new deal, Case said.

“They are obviously betting they will,” he noted.

Even though Countrywide was overrun with bad subprime debt, Case said, the pending purchase of the company has stabilized the situation.

“The mortgage market is not going to die,” Case said. “It’s a multibillion-dollar business, and it is not going to roll over and crash. In a couple of years, once we get this bad paper cleaned up, people will be making money off of this [again].”

The Countrywide story is an “incredible story of decline,” Case said, but he questioned whether it could have been prevented.

“Everyone knew trouble was on the horizon,” he said. “They just didn’t have a clue as to how much.” No one knew home prices would fall so hard and across the board, he explained. The Federal Reserve Bank of Boston last month produced a study arguing that home price declines triggered today’s foreclosure crisis.

“The only way you could have [avoided the problem] would be to stop writing those loans two or three years ago,” Case said. But if a CEO charged with keeping a mortgage company profitable had exited a profitable business years before the profits started falling, he said, he or she would have been fired.

Koss, of Mortgage Network, said there might be a bright side.

“Countrywide was the poster child of excess, the biggest loan buyer and the biggest servicer,” he said. “They set the tone. It’s sort of a sign you’re near the bottom when the biggest, baddest one goes under” and the only direction left to go is up.