HomeLatest NewsFeatured HomebuildersHome Buyer ResourcesBinding ArbitrationResource LinksSubmit ComplaintsView ComplaintsTake Action 101!Report Mortgage FraudMortgage Fraud NewsForeclosure NewsConstruction DefectsHome DefectsPhoto GalleryFoundation ProblemsHomeowner Website LinksHOA Reform
Main Menu
Home
Latest News
Featured Homebuilders
Home Buyer Resources
Binding Arbitration
Resource Links
Submit Complaints
View Complaints
Take Action 101!
Report Mortgage Fraud
Mortgage Fraud News
Foreclosure News
Construction Defects
Home Defects
Photo Gallery
Foundation Problems
Homeowner Website Links
HOA Reform
Featured Topics
Builder Death Spiral
Report Mortgage Fraud
Foreclosure Special Report
Mold & New Home Guide
Special News Reports
Centex & Habitability
How Fast Can They Build Them?
TRCC Editorial
Texas TRCC Scandal
Texas Watch - Tell Lawmakers
TRCC Recommendations
Sandra Bullock
People's Lawyer
Prevent Nightmare Homes
Choice Homes
Smart Money
Weekly Update Message
HOBB Archives
About HOBB
Contact Us
Fair Use Notice
Legislative Work
Your House

 HOBB News Alerts
and Updates

Click Here to Subscribe

Support HOBB - Become a Sustaining Member
Who's Online
We have 1 guest online
ABC Special Report
Investigation: New Home Heartbreak
Trump - NAHB Homebuilders Shoddy Construction and Forced Arbitration
Countrywide Mortgage may seek bankruptcy
Thursday, 16 August 2007

Countrywide taps $11.5 billion credit line
Friedman, Billings, Ramsey Group Inc. analyst Paul Miller said today that if liquidity remains scarce for more than three months, Countrywide could be forced to seek bankruptcy protection from creditors. If it can't get money to continue funding loans, Countrywide might be forced to sell its assets at a deep discount, putting "tremendous pressure on its book value and stock price," Miller wrote in a report on the lender. Merrill Lynch & Co. analyst Kenneth Bruce drew similar conclusions in a report issued yesterday. Countrywide has acknowledged such concerns itself in previous reports to investors.

Countrywide taps $11.5 billion credit line
Loan production being shifted to banking division

Thursday, August 16, 2007

Inman News

Countrywide Financial Corp. has borrowed $11.5 billion from 40 of the world's largest banks and is speeding up plans to move its mortgage loan production over to its banking division, Countrywide Bank FSB.

The move -- announced a day after a Merrill Lynch analyst said the nation's largest lender could face bankruptcy if it's unable to obtain money to continue making loans -- was a response to liquidity shortages and a lack of demand for securities backed by non-agency mortgage loans, Countrywide officials said.

Secondary market demand for mortgages that aren't eligible for repurchase by government-sponsored entities (GSEs) Fannie Mae or Freddie Mac has "been disrupted in recent weeks," Countrywide President and Chief Operating Officer David Sambol said in a statement. "Along with reduced liquidity in the secondary market, funding liquidity for the mortgage industry has also become constrained."

Friedman, Billings, Ramsey Group Inc. analyst Paul Miller said today that if liquidity remains scarce for more than three months, Countrywide could be forced to seek bankruptcy protection from creditors.

If it can't get money to continue funding loans, Countrywide might be forced to sell its assets at a deep discount, putting "tremendous pressure on its book value and stock price," Miller wrote in a report on the lender. Merrill Lynch & Co. analyst Kenneth Bruce drew similar conclusions in a report issued yesterday.

Countrywide has acknowledged such concerns itself in previous reports to investors.

In its most recent quarterly report, the company warned that "a prolonged period of secondary market illiquidity" could reduce loan production volumes, and impact the lender's future earnings and "financial condition."

Countrywide's loan production for July fell short of the $40 billion mark for the first time since February, while foreclosures as a percentage of principal balance rose above 1 percent.

Because investors are less willing to fund loans that are not eligible for delivery to Fannie and Freddie, Countrywide said today it has tightened its underwriting standards and expects 90 percent of the loans it originates will be GSE-eligible or meet its banking division's investment criteria.

Countrywide said its strategy to survive the liquidity crunch is to fund all of its mortgage loan production through Countrywide Bank by the end of September. More than 70 percent of total origination volume has already been moved to the bank, Countrywide officials said.

But by drawing on an existing unsecured $11.5 billion credit facility, Countrywide diminished its future borrowing capacity. Countrywide said more than 70 percent of the loan has an existing term greater than four years, and the remainder has a term of at least 364 days.

Moody's Investors Service and Fitch Ratings cut their ratings on Countrywide's senior debt to the lower end of the investment grade scale. 

In an Aug. 2 statement, Countrywide said it has nearly $50 billion of "highly reliable" short-term funding available as a cushion that would it allow it to continue funding loans until investor demand improved.

"It is important to note that the company has experienced no disruption in financing its ongoing daily operations, including placement of commercial paper," the statement said.

Countrywide investors have not been reassured by such statements, with the stock falling 13 percent on Wednesday and another 15 percent in mid-day trading today. At $18, the stock was down 60 percent from its 52-week high of $45.26.

Fears that the Calabasas, Calif.-based lender's problems threaten the mortgage lending and financial industry helped send the Dow Jones Industrial Average and other stock indexes down sharply Wednesday and Thursday.

Send tips or a Letter to the Editor to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it , or call (510) 658-9252, ext. 150.

http://www.inman.com/hstory.aspx?ID=64252

 
< Prev   Next >
Search HOBB.org

Reckless Endangerment
BY: GRETCHEN MORGENSON
and JOSHUA ROSNER

Outsized Ambition, Greed and
Corruption Led to
Economic Armageddon


Amazon
Barnes & Noble

NPR Special Report
Part I Listen Now
Perry Home - No Warranty 
Part II Listen Now
Texas Favors Builders

Washington Post
The housing bubble, in four chapters
BusinessWeek Special Reports
Bonfire of the Builders
Homebuilders helped fuel the housing crisis
Housing: That Sinking Feeling

Consumer Affairs Builder Complaints

 TRCC Implosion
 TRCC Shut Down
 Sunset Report

IS YOUR STATE NEXT?
As Goes Texas So Goes the Nation
Knowledge and Financial Responsibility are still Optional for Texas Home Builders

OUTSTANDING FOX4 REPORT
TRCC from Bad to Worse
Case of the Crooked House

TRCC AN ARRESTING EXPERIENCE
The Pat and Bob Egert Building & TRCC Experience 

Build it right the first time
An interview with Janet Ahmad

Bad Binding Arbitration Experience?
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
or call 1-210-402-6800

top of page

© 2019 HomeOwners for Better Building
Joomla! is Free Software released under the GNU/GPL License.