Countrywide defaults rising
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We know that Countrywide CEO Angelo Mozilo is a favorite target on the comment section of this blog, but let’s put aside the cheap shots and look at the big picture for a moment here: If Countrywide runs into serious trouble, the entire mortgage market in this country breaks down.
So... news item from Reuters: ‘Countrywide Financial Corp shares fell as much as 9.2 percent today after the largest U.S. mortgage lender was downgraded to ‘sell’ from ‘buy’ by a Merrill Lynch & Co. analyst, who said bankruptcy might be possible if liquidity worsens.’
Whether liquidity worsens or not, Countrywide has another problem: rising delinquincies and foreclosures The LATimes: ‘Countrywide said mortgages in foreclosure surged in July to 0.79% of the loans it serviced from 0.48% a year earlier and 0.74% in June. Delinquent loans accounted for 5.1% of the mortgages on which Countrywide collects payments, up from 4.11% a year earlier and 4.98% in June.’
Earlier this year, Countrywide said it was going on a hiring binge, hoping to pick up workers, and market share, from failing sub-prime lenders. A bold strategy, and a statement of confidence in the mortgage business, but sometimes business strategies are best left unsaid, and unannounced: Countrywide’s sub-prime lending is down 46% from year-ago levels, which call into question the need for 1,100 recent hires.
Note: This is an edited post.
Photo Credit: Reuters