Countrywide debt downgraded to "junk" status

News item from Bloomberg News: "Countrywide Financial Corp.'s credit rating was cut below investment-grade status by Standard & Poor's Corp."

That would be junk to you and me.

More: "The revision reflects 'the new level of uncertainty as to the ultimate legal status of Countrywide's creditors' after the lender's sale to Bank of America Corp., Standard & Poor's said in a release today.

The revision also reflects this piece of news today, also from Bloomberg: "Bank of America, the second- biggest U.S. bank, said it may not guarantee $38.1 billion of Countrywide Financial's debt after taking over the mortgage lender, increasing the likelihood of a default. 'There is no assurance that any such debt would be redeemed, assumed or guaranteed,' the bank said in an April 30 regulatory filing..."

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: AP

Comments

[jaded]

But Angelo's still worth every penny of compensation!

[Tim]

Um... How can BofA take over Countrywide's assets without guaranteeing the debt? Am I reading this correctly? BofA gets the good loans Countrywide made and gets to forget about all the bad loans and those investors that invested in the bad loans? Unless I am misunderstanding the situation?

[Laker]

Tim,
Dude, That is exactly what happened with Bear Streans.
JP Morgan Chase "bought" the best loans or assets of BS, and the bad loans, aka junk (that ones worth 0 on the dollar) sent to the FED to guarantee... (the tax payers...)
I wouldn't be surprised if BoA would acquire country wide and the FED would come from the corner guaranteeing $38 Billion like it did $30 billion for JP Morgan,,,,,.
If it was not sad, i would laugh about it...
But it is sad, and as i said long time ago, open your wallets...After this is said and done, the smell of the $600 stimulus rebate check would be long forgotten and replaced with huge tax bills...

[MyLessThanPrimeBeef]

Phew, thank God it's only a downgrade to 'junk' and not all the way down to 'crap'...yet.

[John]

So Standard & Poor actually felt that Countrywide's bonds WERE investment grade before today?

Boy, that instills confidence in the rating institutions.

[Lou]

I guess that old saying is true: garbage in, garbage out.

[CW Former Underwriter]

Garbage In - Garbage Out
I hated working there.
NO- Sleezy Mozillo does not deserve the compensation he got. He cheated all of the investors who purchased the low quality loans. Now all of us are going to have to pay for his decisions.

[William Jones]

If B of A is able to get the feds to take the "bad" paper, then we are continuing the trend that started with the BS bail-out - the privatization of gain and the socialization of loss.

JP Morgan bought BS for a low price only keeping the "good" part and forcing the govt. to take the bad part.

The golden rule continues to be the norm...those who have the gold make the rules.

[JohnnyB]

As sung by a Mozillo impersonator at a live BofA investor fundraiser last night... captured by the 5 star hotel's security video feed, a disgruntled Countrywide foreclosure sweepstakes winner posted it on utube, but it was immediately removed. Luckily, the audio was saved...

"My Humps"

What you gon' do with all that junk?
All that junk inside your trunk?
I'ma get, get, get, get, you drunk,
Get you love drunk off my hump.
My hump, my hump, my hump, my hump, my hump,
My hump, my hump, my hump, my lovely little lumps (Check it out)

I drive these brothers crazy,
I do it on the daily,
They treat me really nicely,
They buy me all these ices.
Dolce & Gabbana,
Fendi and NaDonna
Karan, they be sharin'
All their money got me wearin' fly
,
Seven Jeans, True Religion's,
I say no, but they keep givin'
So I keep on takin'
And no I ain't taken
We can keep on datin'
I keep on demonstrating....

She's got me spendin'.
(Oh) Spendin' all your money on me and spending time on me.
She's got me spendin'.
(Oh) Spendin' all your money on me, up on me, on me.

What you gon' do with all that junk?
All that junk inside that trunk?
I'ma get, get, get, get you drunk,
Get you love drunk off my hump.

I'ma make, make, make, make you scream
Make you scream, make you scream.
What you gon' do with all that junk?
All that junk inside that trunk?
I'ma get, get, get, get you drunk,
Get you love drunk off this hump.

I'ma make, make, make, make you work
Make you work, work, make you work.

(A-ha, a-ha, a-ha, a-ha) [x4]

She's got me spendin'.
(Oh) Spendin' all your money on me and spendin' time on me
She's got me spendin'.
(Oh) Spendin' all your money on me, up on me, on me.

BLACK EYED PEAS

[puckhead]

The black helicoptor crowd is at it again. No, the FED is not going to come in and guarantee Countrywide's debts. Countrywide does not have their hands in everyone's cookie jar like Bear Stearns did. BofA will renegotiate a lower deal with Countrywide or walk away from the deal, in which case Countrywide probably goes bankrupt.

[E]

So when do the ratings firms get downgraded to junk?

[Ace]

I viewed a condo conversion yesterday that had a sign that said '100% financing provided by Countrywide'.

I don't know how that sign was.

I also saw another condo that had a price sheet that gave the perspective buyer the monthly prices if they put down 3% and take out a 40 year loan!?!?!?!

The weird thing is that on a $399k unit, the price between the 30 year and the 40 year loan was only a hundred some dollars more per month.

Any mortgage brokers here? Is anyone actually taking out 40 year loans?

[NorbertoB]

Does anyone think that maybe the real criminals are the folks at the rating agencies and BofA? How does a company with billions in cash, and as Ken Lewis himself said "impressive lines of liquidity" go from $22B in market cap to $4B at "rumors of bankruptcy" (probably started by BofA)? And then just as conveiniently, by BofA filling a statement with the SEC saying in essecnce it will be manipulating the bankrupcy laws and using a front company "Red Oak" to allow it to pick the parts of CFC it wants, and dump the depts, by doing that S&P (fools that over-rated the bond in the first place) now lower them below where they should be setting BofA up to scoop up CFC for even less and screw the bond holders in the process (not to mention the majority of the 50,000 CFC employees who are basically honest hard working people. Good job S&P! You guys just got played like a 2-bit pawn by BofA!

[Laker]

puckhead,
I'm sure you said same things about Bear Stearns before the FED shelling $30 Billion of our tax money..
Countrywide is insolvent, it doesn't matter how you look at it.
Also, unlike other banks, Countrywide most of the time forecloses for the exact amount of the loan, never less. Which after the auction, reduces the REO price a lot to sell. That means that their book vales are over inflated up until they unload the property. - they are worth less than what we think they are...

[tedson]

i think Mozillo should share a jail cell with Bush, Cheny, Rumsfeld & Greenspan.

[puckhead]

"puckhead,
I'm sure you said same things about Bear Stearns before the FED shelling $30 Billion of our tax money..
Countrywide is insolvent, it doesn't matter how you look at it.
Also, unlike other banks, Countrywide most of the time forecloses for the exact amount of the loan, never less. Which after the auction, reduces the REO price a lot to sell. That means that their book vales are over inflated up until they unload the property. - they are worth less than what we think they are..."

LOL's. Laker, many people knew that the FED would not let Bear go bankrupt and default on their debts. That was a no brainer to anyone who understood how deeply Bear was involved with other banks/hedge funds etc. Like I said before, Countrywide is a peon compared to Bear. No one is going to save Countrywide if BofA walks from the deal. And if I was BofA, I would use that to squeeze more concessions from Countrywide and get a lower price or walk away from the deal. Stop hoarding your pennies, no one is going to save Countrywide.