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Posted: 8/16/2007 5:49:25 AM EDT
not good news...
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Associated Press
Countrywide Borrows $11.5B From 40 Banks
By STEPHEN BERNARD 08.16.07, 8:51 AM ET


NEW YORK -
The nation's largest mortgage lender borrowed $11.5 billion from a group of 40 banks to fund new loans, in a move that shows just how deep the lending crisis has become.

Countrywide Financial Corp. said Thursday it made the move amid a credit crunch that has driven a number of its smaller peers to bankruptcy.

"Countrywide has taken decisive steps which we believe will address the challenges arising in this environment and enable the company to meet its funding needs and continue growing its franchise," Countrywide President and Chief Operating Officer David Sambol said in a statement.

The credit worries have grown as the secondary market for mortgages all but disappeared in recent weeks. Investors have worried about the value of loans and rising delinquencies and defaults.

Mortgage lenders rely on the secondary markets to borrow money to make more loans. The problems started as subprime mortgages - loans given to customers with poor credit history - started going delinquent and defaulting at faster rates.

The problems have spread to the broader mortgage market, making investors nervous about nearly all types of loans that cannot be purchased by Fannie Mae or Freddie Mac.

Such "conforming" loans are considered safer because Fannie and Freddie are government-sponsored entities. Countrywide said some 90 percent of the loans it originates from now on will be conforming loans or will meet its internal bank criteria.

By adjusting its product mix to originate Fannie and Freddie-approved loans almost exclusively, Countrywide will be cutting out most subprime, alt-A and jumbo loan products.

Alt-A mortgages are given to customers who either have minor credit problems or who cannot provide full income documentation required to get a traditional prime loan. Jumbo loans are mortgages for more than $417,000, the cap at which Fannie and Freddie will purchase loans. Jumbo loans typically are given to customers with excellent credit history.

Shares of Countrywide fell $3.67, or 17.2 percent, to $17.62 in premarket trading Thursday.

On Wednesday, a Merrill Lynch & Co. analyst downgraded Countrywide to "Sell," just days after calling it a "Buy," attributing the change to the rapid deterioration of the credit market. Friedman, Billings, Ramsey Group Inc. said Thursday a continued liquidity crunch for more than three months could send Countrywide into bankruptcy.

Asian stocks plunged overnight and European markets fell sharply Thursday as U.S. credit worries continue to spread to other countries.
Link Posted: 8/16/2007 5:50:43 AM EDT
[Last Edit: 8/16/2007 9:06:49 AM EDT by Crowkiller]
My understanding is that Countrywide is buying all of the now defunct Homebank's mortgages.

That may be what the money is for.

ETA: My source now says they are not doing so well.
Link Posted: 8/16/2007 5:50:53 AM EDT
If they go under, do I have to pay my mortgage anymore?

(just trying to find an upside in this... what a mess)
Link Posted: 8/16/2007 5:56:39 AM EDT
It depends on what they are using those loan proceeds for.

If they are servicing existing debt because of a loss of revenue for delinquent mortgagees.......BAD very bad.

If they are as the article claims using the money to fund new loans and grow the franchise.......that is business as usual and a very mis-leading news article.
Link Posted: 8/16/2007 6:01:56 AM EDT
I made a lot of money yesterday selling short on countrywide.

All the lenders for that matter.
Link Posted: 8/16/2007 6:02:12 AM EDT

Originally Posted By macman37:
If they go under, do I have to pay my mortgage anymore?

(just trying to find an upside in this... what a mess)


Upside would be seeing that cocksmoker from their TV ads on the side of the highway with a "will work for food" sign.
Link Posted: 8/16/2007 6:52:43 AM EDT
First Magnus major player just closed thier doors and will not be funding anymore loans
Link Posted: 8/16/2007 7:27:35 AM EDT

Originally Posted By macman37:
If they go under, do I have to pay my mortgage anymore?

(just trying to find an upside in this... what a mess)




They most likely service the loan or debt. An investor owns the note. If they were to go under it would just transfer to another company for debt service.


This is shtf for the RE industry. Jumbo loans start at $418k. At $417k your rate is around 6%, at $418k your rate is 7%. This is real bad for people who live in expensive areas. For example. We're looking at a home in Scottsdale that's priced at $575k, with 20% down ($115k) my loan balance would be $460k. $43k above conforming. I won't be buying until the price gets down to around $525k. I’m waiting patiently….
Link Posted: 8/16/2007 7:51:17 AM EDT

Originally Posted By crurifragium:

Originally Posted By macman37:
If they go under, do I have to pay my mortgage anymore?

(just trying to find an upside in this... what a mess)


Upside would be seeing that cocksmoker from their TV ads on the side of the highway with a "will work for food" sign.


What is with that dude? WORST. SPOKESMAN. EVERRRR. He looks like John Kerry after a raging heroin binge.
Link Posted: 8/16/2007 9:05:32 AM EDT
Take a look at the october put on CFC (CFCVY). I bought 2 contracts (200 shares) 1 week ago for $3.90. It is now valued at $ 13.30. That is $2660 on a $780 investment. $1880 profit in a week.
Link Posted: 8/16/2007 9:14:25 AM EDT
Link Posted: 8/16/2007 9:18:22 AM EDT
Countrywide would save billions if they stopped their incessant radio and TV ads.
Link Posted: 8/16/2007 9:20:33 AM EDT
What goes up also goes down.
Link Posted: 8/16/2007 9:20:54 AM EDT

Originally Posted By macman37:
If they go under, do I have to pay my mortgage anymore?

(just trying to find an upside in this... what a mess)


That would be nice!
Link Posted: 8/16/2007 9:22:49 AM EDT

Originally Posted By BenDover:


I am seeing no shortqage of foreign buyers of these wholesale blocks either.


That right there should be of some concern...
Link Posted: 8/16/2007 10:38:55 AM EDT

Originally Posted By Dog1:

Originally Posted By BenDover:


I am seeing no shortqage of foreign buyers of these wholesale blocks either.


That right there should be of some concern...


I don't necessarily think so. The one thing foreign buyers can't do with our real estate is dig it up and take it home. Most of these properties are single family homes that are blocked together under a managed contract with an asset management group. Foreign investors are simply bidding to buy the block of REOs, and will put them all back on the market to sell to retail buyers like any other investor.

All it says to me is that with the dollar being weak, there are a lot of people around the world who are 1) taking advantage of a serious buyer's market, & 2) hedging the bet that like all cyclical economics, the trough isn't going to last forever.

It also shows that while foreign investment in US financial instruments may not be as hot and heavy, the USA is still a strong place for people to sock their money away in one form or another.

With all the problems, buying US assets beats the hell out of investing in other turdhole markets that are far more unstable.
Link Posted: 8/16/2007 3:38:58 PM EDT

Originally Posted By BenDover:

Originally Posted By Dog1:

Originally Posted By BenDover:


I am seeing no shortqage of foreign buyers of these wholesale blocks either.


That right there should be of some concern...


I don't necessarily think so. The one thing foreign buyers can't do with our real estate is dig it up and take it home. Most of these properties are single family homes that are blocked together under a managed contract with an asset management group. Foreign investors are simply bidding to buy the block of REOs, and will put them all back on the market to sell to retail buyers like any other investor.

All it says to me is that with the dollar being weak, there are a lot of people around the world who are 1) taking advantage of a serious buyer's market, & 2) hedging the bet that like all cyclical economics, the trough isn't going to last forever.

It also shows that while foreign investment in US financial instruments may not be as hot and heavy, the USA is still a strong place for people to sock their money away in one form or another.

With all the problems, buying US assets beats the hell out of investing in other turdhole markets that are far more unstable.


I just don't like foreigners..
Link Posted: 8/16/2007 3:41:23 PM EDT
[Last Edit: 8/16/2007 3:42:21 PM EDT by Michael_B]

Originally Posted By gunham:
Dems are doing every thing to make Bush look bad and destroy this country. Most news reporters are Democrats/Libs. Because of this, I take any bad news with a gram of salt.


lol

And all the traders are libs too?

This was an emergency line of credit, and they just tapped the entire amount.

Still not too late to get short.
Link Posted: 8/16/2007 3:53:04 PM EDT
Good grief, does everything have to be partisan politics?

Link Posted: 8/16/2007 5:33:08 PM EDT
BREAKING: IT'S TIME FOR A NEW BUZZWORD PEOPLE.
Link Posted: 8/16/2007 5:44:38 PM EDT
Cisneros is on their board

Here is the top dog at the company

He bought his honorary Doctorate from Pepperdine


The Mozilo Family Executive Dining Center



Angelo and Phyllis Mozilo accept the
University's gratitude from President
Andrew K. Benton.

Family is also a central focus of Phyllis and Angelo R. Mozilo, who are devoted to their five children and grandchildren. The Mozilo Family Executive Dining Center in Villa Graziadio represents a recent choice that this couple made, an investment in education that will endure beyond their lifetimes


He's a policy advisor for Hahvahd

Made $69 million last year, $160 million over the past 5 years

Link Posted: 8/16/2007 5:48:04 PM EDT
Consider that the Federal Rexerve has put $100 billion+ of made up money to keep the stock market going in the last week and a half.
Link Posted: 8/16/2007 5:49:39 PM EDT

Originally Posted By krpind:
It depends on what they are using those loan proceeds for.

If they are servicing existing debt because of a loss of revenue for delinquent mortgagees.......BAD very bad.

If they are as the article claims using the money to fund new loans and grow the franchise.......that is business as usual and a very mis-leading news article.


To fund new loans O Horned One !!

5sub
Link Posted: 8/16/2007 5:57:26 PM EDT
[Last Edit: 8/16/2007 6:01:43 PM EDT by fxntime]

Originally Posted By krpind:
It depends on what they are using those loan proceeds for.

If they are servicing existing debt because of a loss of revenue for delinquent mortgagees.......BAD very bad.

If they are as the article claims using the money to fund new loans and grow the franchise.......that is business as usual and a very mis-leading news article.


Understand your reasoning and it's for new mortgages. However, the reason for the loans is because all the normal capitol that used to be there to fund them has dried up. Without it they lose a huge part of their business as they can't sell mortgages.

Not like Countrywide was a "good" credit place, they have lots of modular home [in parks] mortgages and these things are going belly up right and left. Plus, they are on property not even owned by the mortgagee.

Lots of cover ups going on to try and ease the crunch right now. Probably in THEIR best interest but not for anyone invested in them.

I might be wrong but the ballyhoo on rising mortgage applications that I keep hearing touted as a good thing is BS, all most of them seem to be refi's from ARMs to fixed and many [probably over half IMHO] won't be able to be refi'ed as they won't meet the new stricter criteria. They might get the subprime fixed [7-8%+] but that won't help them and they already have pulled all the equity out of their house.

Link Posted: 8/16/2007 10:50:31 PM EDT

Originally Posted By crodeo:
Take a look at the october put on CFC (CFCVY). I bought 2 contracts (200 shares) 1 week ago for $3.90. It is now valued at $ 13.30. That is $2660 on a $780 investment. $1880 profit in a week.

Bastard! My WMMU.o puts were up 18% yesterday, then WM inexplicably surged today and I'm back to dead even.

Oh well, they're good until January. I figure there'll be enough shit hitting the fan by the end of the year to make them worth decent money. Think CFC is going to tank further? Who else looks bad?
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