Countrywide...Continued

Alright, I've already had a say in what I personally feel about Countrywide. As you can see, they aren't really high on my list. I would actually love to avoid them altogether but that would be ignoring the 500 pound gorilla in the room.

I knew that Countrywide couldn't be doing as well it as it said. They said last week they had access to over 180 billion in liquidity. Today they had to draw down 11.5 billion to help with liquidity issues. Countrywide is sending out a lot of mixed signals over the last couple of days. One day they are strong. The next they can't fund loans. Does this remind anyone of what just happened to American Home Mortgage?

What is really disturbing is that Countrywide is saying they are going to write 90% of loans to conforming guidelines (Fannie and Freddie, max loan amount of $417,000). Fannie and Freddie are the only investors right now that lenders can use to sell on the secondary market. That wipes out huge portions of their current business (sub-prime, Alt-A, and jumbo loans). I hope they have their pink slips ready because they aren't going to have work for everybody.

I had a personal issue today where a member called me to set up an appointment for application to purchase a home. They had been trying to go through Countrywide and were informed today that the product they were on was no longer being offered. I spoke with my Vice President of Operations and he said that he strongly feels that Countrywide is going to go into Bankruptcy if liquidity issues continue to plague it.

And how would Countrywide like to end a perfectly awful day? With a class action suit of course.

What is going to be Countrywide's ultimate fate? I think the next couple of weeks are going to tell the true story. You will know then if Countrywide is going to be able to continue on (as a much different lender) or have to fold up shop and go into bankruptcy (and maybe re-emerge as a much different lender). Either way, things are changing. But not me. I still don't like Angelo Mozilo. He sold out most his stock in Countrywide. And remember, he was on the board of directors at Home Depot as recently as last year. How did Home Depot do during his tenure on the board? Ask Robert Nardelli, he got rich and went off to ruin Chyrsler. I guess if Chyrsler can be ruined. But that is a whole different blog.