New Homes Sales 2007 & Mr. Mozilo

Two bits of information caught my attention today. 1) That new home prices declined over 26% year over year. Marking the largest drop in four decades. 2) Angelo Mozilo is forgoing both his severance, consulting fees, and plane rights that we was granted by Bank America when they bought out Countrywide.

The first bit of news is not a new piece of information. We all have known that prices were sagging and that year over year numbers would decline. What I do think is a surprise is that December numbers showed an annualized amount of 604,000 sales. Over 40,000 homes less than anticipated annualized amount of 645,000. Prices also feel 10% in December alone year over year.

At the current pace of sales there is STILL an inventory of over 9.6 month supply of new homes on the market. Wow. Being in the market and seeing how much builders have cut back on new homes, that 9.6 month supply is staggering.

2008 is still new, but don't expect any substantial change in these numbers. Many analysts are forecasting further price declines in home prices, though not nearly as severe as 2007. Even with rates dropping, activity is not increasing. The issue is twofold. Tighter guidelines for mortgage qualification and fear on buyer's behalf concerned that the home they purchase today will be worth $10,000 or $20,000 less in six months.

As for our friend Mr. Angelo Mozilo...good for you. It is one of the only good, humane, and decent things that you have done within the last 2 years. Though this is only a small gesture for a man that has seen his company's stock falling over 80% in less than one year. At the start of last year Countrywide account for 1 out of every 6 mortgages completed in the country. Today, the company was bailed out by Bank America and is considered the dirty word of the mortgage industry. He sold out huge portions of his stock holdings while shareholders were left waiting to be delivered with a grip on the bag.

By turning down his GIVEN severance, consulting fees, and place rights was a just and needed move. It probably wasn't his idea. In fact, I'm sure that he didn't give up his money easily. His quote about his move,

"My primary focus today -- as it has been for the past 40 years -- is to do what is in the best interests of Countrywide's employees, customers and shareholders," Mozilo said in a statement.

"I believe this decision is the right thing to do as Countrywide works toward the successful completion of the merger with Bank of America."

Yep...no one can fold like Countrywide...no one. But don't feel too sorry for Mr. Mozilo if you think I am being too harsh on the man. He does get to keep his deferred compensation and his retirement benefits. It will total into the millions, even with the price of his stocks company under $6 per stock. He won't be hurting for money.

Countrywide Again

It's been awhile since I wasted my time talking about Countrywide. But they are in the news again. Today they announced they were cutting 5,000 jobs, which is part of the 10,000-12,000 already announced. That really wasn't the news. It was that NC Treasurer, Richard Moore, has asked that the SEC look into the timing of stock sales completed by one Angelo Mozilo.

Oh tell me it isn't so Angelo! Mr. Mozilo has stated that the trades were preplanned and has been doing such since 2004. Which is totally correct and some of the stock he was actually required to sell. But is what really is getting people upset is that the selling of his stock accelerated rate in October of 2006. And it changed (picked up steam) on a month by month basis.

Suspicious, absolutely. Consider that Countrywide's stock has gone from over $45 in early February (before New Century's demise)to under $18 in the last few months (CFC closed at $18.28 today). Mr. Mozilo has pocketed over $100 million in that time frame. You can see why people would be upset.

I will give Angelo the benefit of the doubt here. I think that his stock sales have been perfectly legal in all aspects. However, I feel that legal and ethical are two entirely different things. If Mozilo, who is already a very rich man, sold his stock to pocket even more money, in a conscious effort. Well, that is just sleazy. Which is what I call Angelo Mozilo consistently....a sleaze-ball.

Moderator vs Mozilo

Thank you and welcome to this week's edition of The Moderator. Our fake guest this week is CEO of Countrywide Angelo Mozilo. I know that FB has been waiting for this inview since we first decided to do this.

Mozilo: Glad I could make it.

Moderator: Rough week or month or so?

Mozilo: You could say that. It is always a difficult decision to let people in your organization go.

Moderator: 10-12 thousand more in the next 3 months?

Mozilo: We have to be concerned about the future of the company. This is a necessary step to insure that Countrywide continues in the future.

Moderator: And what about news today about the company looking for more help?

Mozilo: No comment.

Moderator: That means it is true. Bank of America put $2 billion up for you and now your company can't even deliver the stock price of $18 that they convert to common stock. And you need even more help?

Mozilo: It is a difficult market out there.

Moderator: No one can do what Countrywide can.

Mozilo: ..............

Moderator: Sorry, must have struck a nerve. Ok, so you don't blame your company for a large part of the current fallout from sub-prime lending?

Mozilo: No, I don't. We originated loans to what the market called for.

Moderator: But you were the largest sub-prime lender in the country. Don't you hold responsibility for some of the issues that now plague the market?

Mozilo: I am responsible to my shareholders.

Moderator: And how is that working out, Spanky?

Mozilo: No so well at the moment...not so well.

Moderator: Yeah. Down 57% on the year. But you personally aren't hurting. You have a high compensation package. You were on the board when Robert "Count the Money and Run" Nardelli was stealing Home Depot blind.

Mozilo: So? You don't think it kills me to see the company I created struggle the way it has? Do you think I enjoy cutting staff? Do you think I give a darn about what I make personally when the rest of the company is basically dying?

Moderator: No, I don't think it bothers you at all.

Mozilo: Ok, (laughing) you're right. I do have a lot of money. I had you going no? You thought for a moment I was a good guy right? Can I sell it? Huh? Huh? Can I sell it?

Moderator: No. Not impressed in the slightest. Well that is all for this week. We haven't decided on who I will interview for next week. I am hoping the Bullet will let me choose someone from another arena other than personal finance. It would be nice.

Later.