Countrywide slide continues

Let's see: There is turmoil at Bear Stearns, a $9.4 billion write-down at Morgan Stanley, a major insurer of bonds, MBIA, is in trouble, and now there are allegations of a "sub-prime smoking gun"
(Mark Lacter explains at  LA Biz Observed).

How do you keep track of it all, and what it means for the availability of mortgages in the future?

The short answer is, I don't -- it's too complicated. There are too many moving pieces, and too much noise. But my secret short-cut is this: check Countrywide Financial stock. It's a good proxy for all the problems of the mortgage industry. And it is close to hitting a new low.

CFC closed today at $8.77/share, very close to its recent low of $8.64 on Nov. 26.

Your thoughts? Comments? Other barometers you watch? Email story tips to peter.viles@latimes.com.
Photo Credit: Countrywide Financial CEO Angelo Mozilo, by Bloomberg.

Comments

[ISoMissInvestorguy]

Isn't this the same stuff - the "pyramid/ponzi scheme" of the debt packaging in hedge funds that the housing blogs have been going on and on about for, like, ever?

or something different? another level? I am confused now too...

[Cal]

I watch the mortgage broker message boards, you see all the issues crop up there before they hit the general marketplace. You have to learn to read the tea leaves though.

[AJ]

Overflowed septic system! Very sad!
The proverbial you know what is festering before it is flushed down the toilet to an overflowed septic system (for all of you that don't know what a septic system is google it). It is a balance of flushing and draining.
Not the easy way with a sewer where it is washed away never to be seen.
What can I say!
And I speak from the Northeast who is watching this Tsunami head our way.
Happy holidays.

[Vilez of Vile]

Now could be a good time to buy CFC

[tee hee]

hey Viles,

So youre 44 and still renting, bro? must be tough!!!!

http://query.nytimes.com/gst/fullpage.html?res=
9A0CE0D6143CF933A25751C0A9649C8B63&sec=&
spon=

great to have so many new york transplants our here blogging about "LA Land"!!!!

[William E. Jones]

The more pictures of Mozilo I see the more the guy looks like a thug. I said "looks like" - that doesn't mean he is one.

[mike]

hey tee hee...i dont get it. why are you bashing that guy?? he could say the same thing about you as a homeowner right now. how do you know he rents???

[Manny from Inglewood, because its Real Estate... unlike that other Fake Estate]

Tee Hee
No personal attacks, lets try to keep things on the up & up. Other than that Peter has mentioned a few times that he rents, I thought it use to be in his profile (I could be wrong). I hear it’s always tough for out of state people to buy in this market much less those of us who have been here for a while. I do think it is kind of funny that as a guy from NY he is over seeing a blog on So Cal Real Estate.

[TrojanDLA]

Now is NOT a good time to buy CFC because there is more bad news down the pipeline.

Declining loan volume, more defaults, more lawsuits, more government pressure to lose money, more public backlash - this is just the tip of the iceberg for Mozilo.

If this is a bad summer, expect another 20% drop on CFC. If CFC is still solvent by the end of summer, that's a good time to look at buying.

[Ken Land]

What's wrong with renting? One of the clearest sign of the stupidity of regular Americans is so clearly displayed by the poster Tee Hee up there. Renting and owning has tradeoff. It's really not that complicated but I could see how if you are not very smart, you could have a tough time understanding it. Let me try to dumb it down for you. There is cost of renting and there is cost of owning. Under a normal market, the two should go up and down pretty much in locked step. Unfortunately, easy money and irrationality plus stupidity tend to distort the picture. Here is what the own vs rent cost ratio looks like for LA.

http://krugman.blogs.nytimes.com/2007/12/
20/charting-the-housing-bubble/

Perhaps even in you somewhat diminished brain capacity you could still see that the cost of ownership has gone way too high and has become unsustainable. The last time this own-vs-rent ratio got out of control for LA was in the early 90s - it shot up to 1.5 - and it was followed by a home price decline of 20%. The ratio is at 2.4 now!!!

It's a scandal the myth that ownership is always better than renting so permeate our culture despite its obvious fallacy. Our government perpetuate that myth. Our parents bought it. All the financial advisors bought it. And it just sort of became an accepted fact. It's NOT!!! Your home is an investment - an investment just like other investments that entail risks from price fluctuation. Also like every investment, there is an intrinsic value associated with your house and it's not infinity. It's people like you that blindly bought into the myth of ownership at all cost who are causing all the mortgage problems right now.