Timeline: The Countrywide Crisis
Countrywide deserves the big story treatment, and the big story treatment includes a blog timeline -- highlights of our previous Countrywide posts:
April 28: The LATimes reports that Countrywide CEO Angelo Mozilo took home $120 million last year, and $284 million over the past two years. The Countrywide Foreclosure blog reports Countrywide owns 7,610 foreclosed houses.
May 21: Mozilo tells Reuters government regulation is hurting the mortgage industry: " When they attacked the pay option and interest-only loans, that really put a dent in a lot of the product, which is perfectly good product," he says.
May 22: Mozilo claims borrowers have been pressuring lenders: "They put a lot of pressure on us to make them loans," he says.
June 14: Business Week breaks what turns into a very big story: it reports that redemptions have been frozen at an obscure Bear Stearns hedge fund that invested in sub-prime mortgages.
June 26: Countrywide issues a statement denying stock market rumors that the FBI has raided some of its offices.
June 30: The Federal Reserve issues new, tighter, lending guidelines.
July 24: Influential bond fund manager Bill Gross writes that the sub-prime meltdown is not contained, and is in fact causing a wider credit squeeze.
July 24: Countrywide reports a 33% decline in profits, signals that defaults are spreading beyond sub-prime borrowers, slashes its profit outlook for the rest of the year and predicts the housing market will not recover until 2009.
August 10: In an SEC filing, Countrywide says it faces "unprecedented disruptions" because investor demand for mortgages has evaporated.
August 15: Merrill Lynch downgrades Countrywide to "sell," raising the possibility of bankruptcy if the credit squeeze worsens. The downgrade comes on the heels of Countrywide's own report that defaults on its loans are rising.
August 16: Countrywide issues a statement saying it is drawing on an $11.5 billion credit facility and tightening lending standards. Fitch ratings downgrades its debt, and Countrywide shares tumble again. The Countrywide Foreclosure blog reports Countrywide now owns 10,796 foreclosed houses.
From the Credit Suisse research note on CFC:
"In addition, the company will also be shifting its origination mix towards predominantly GSE eligible paper, which solidifies its ability to sell its production. Clearly, origination volumes should decline dramatically in the present environment."
....
Dramatic decline in origination volumes.... doesnt bode well for housing or staying employed at CFC.
Posted by: Cal | August 16, 2007 at 11:44 AM
Perhaps if this guy spent more time in the office and less time working on his tan they wouldn't be in such a mess! lol!
Countrywide is not going to fail guys, relax. They will get an extension on your commercial paper until they can dump their mortgage loans at 20 cents on the dollar in 2 weeks. Guaranteed.
Posted by: vultur | August 16, 2007 at 12:25 PM
The regulators are like dinosaurs: They get kicked in the butt and years later, they turn their head and say, "what was that"? If I hadn't watched this whole thing unfold over the last eight or nine years, I wouldn't have believed it. The lenders made gazillions of dollars and now the taxpayers are going to pay the bill in the form of reduced worth of our savings. These idiots in Washington need to turn on the lights and get back to work on reforming the securities industry so that nothing like this can happen again. Nah.......that will never happen.
Posted by: Jax | August 16, 2007 at 01:31 PM
Can anyone tell me the absolute quantum of sub-prime mortgages currently floating around in the MBS market? It seems to me that if you can quantify this figure, conservatively write-down the value of such loans to 25%-30%, then you can quite easily box-in the damage in the credit markets.
Posted by: vultur | August 16, 2007 at 01:36 PM
So, I take all my neighbors' money; and, I go to Las Vegas; and I put it on red.
It comes up black. I demand to see the manager; and I expect him to give me
all "my" money back. I have already seen this movie. Back in the '80s, it was called everything except the "Savings and Loan bail out." This exploitation movie is straight to video (do not pass go; do not collect $200; do not receive
a get out of jail free card). You broke it; you pay for it. Not everyone was stupid enough to go for the ARM/no money down/no payment until April, 2008, game.
Posted by: yours truly, johnny dollar | August 16, 2007 at 02:42 PM
Turns out even their claims made this morning were optimistic:
http://www.reuters.com/article/marketsNews/idUKN1639790420070816?rpc=44
Posted by: eprobert | August 16, 2007 at 03:44 PM
Gee, do you think his bonus will be smaller this year?
Posted by: Hoover | August 16, 2007 at 04:58 PM
I came across an article at http://www.brokerforyou.com/brokerforyou/
written by a San Diego real estate broker that claims that subprime loans are NOT the main cause of the housing value decline.
Interestingly, he claims that greed is the #1 cause of the decline! It’s really a great little article, you should check it out!
He’s also got some interesting charts on median home value drops at http://www.brokerforyou.com/brokerforyou/index.php?paged=2
Posted by: San Diego Lasik | August 16, 2007 at 07:54 PM
Turn out the lights; the party's over........
Posted by: yours truly, johnny dollar | August 17, 2007 at 04:46 AM