March 12, 2007

FLASH: Subprime king Countrywide (hello Sarbanes-Oxley) finally comes clean, says it may face "earnings volatility". You don't say!

I think there are now grounds to open an SEC investigation for insider stock dealing, stock manipulation and false statements at Countrywide.

Just last week Angelo Mozilo had Countrywide's CFO marched out to proclaim how happy days were here, and how Countrywide was a "top-conditioned athlete", even though they knew subprime is in 100% meltdown mode, 19% of their subprime loans are already delinquent, and the disease has likely spread to their Alt-A portfolio.

Well, now today, possibly because of the advice of legal council, Countrywide started coming clean just a bit. Or maybe Mozilo and the corrupt insiders at CFC finally sold through the shares they had available to dump.

Note: Like Mozilo and the CFC insiders, I'm betting the stock will continue to free-fall and am short CFC. Oh, anyone see NEW is off another 50% today, down 95% in the past six weeks? Nah, no problems in subprime. None at all.

NEW YORK, March 12 (Reuters) - Countrywide Financial Corp., the largest U.S. mortgage lender, on Monday said it has minimal exposure to nonprime mortgages, but may still experience fluctuating earnings in the near term due to turmoil in the U.S. subprime market.

The company said it was tightening its underwriting standards, adding that nonprime loans were only 7 percent of its funding volume in February.

Countrywide said it should benefit from competitors exiting the market. But the company may experience some short-term earnings fluctuations as difficulty in the subprime market cut into the amount of money it generates from selling loans to investors, and the value of the loans it hangs onto.

The lender also said it made $35 billion in mortgage loans in February, up 10 percent from a year earlier but down from January.

Countrywide said loans to less creditworthy borrowers fell to $2.6 billion from $2.8 billion a year ago.


Anonymous said...

The money continues to flow out...

The Bushes buy water rights in south america and now haliburton moves its corporate headquarters to dubai.

The ship is sinking!!!

Anonymous said...

"haliburton moves its corporate headquarters to dubai"

After the way HAL was treated by the American government (and democrats in particular) I don't blame them moving to another is Atlas Shrugged - if you don't want our jobs and tax money we will find someplace that does...and you can live in your poor and unemployeed socilaist hell...

Marky Mark

Lisa said...

Is this the same lender who isn't making 100% LTV mortgages anymore as of today?? Even if the buyer is "Prime" based on credit score, Countrywide is in trouble

brokersleaveyoubroke said...

Of all the subprime meltdown stories in the news today, and there were a ton of them, was one writer who made the observation that Freddy mac issued a statement last week that they would no longer make loans to people who would not be able to make the payments. This is an outright admission that up until last week they bought loans where they knew that the borrower could not make the payments. Another great story was that an analyst for Bear Sterns wrote a positive analysis for NEW and upgraded it on March 2.

Anonymous said...

You didn't report the other subprime news. NEW is halted by NYSE.

All of its lenders have hit that red 'eject'.

Bankruptcy is imminent.

CFC isn't going to zero but it is going lower.

Anonymous said...

GASP...Who would have guessed

Mc Masion owner said...

Countrywide may feel subprime earnings drag.

The keyword is "MAY"... but it MAY not. So go shopping and leave this blog to chicken littles.

Mark in San Diego said...

Taking off to Disneyland for a few days, the happiest place on earth, knowing full well that the great condo I want that is still 800K will be 500K next year - now that the "lease a lifestyle" people who NEVER asked the price - just the monthly payment - will be out of the picture - Ponzi game over with no new buyers. . .Check Bloomberg today for the best article ever about the BIG FREEZE in financing.

New Century Financial said...

New Century shares suspended
By Ben White and Michael Mackenzie in New York

Published: March 12 2007 15:21 | Last updated: March 12 2007 15:21

Trading in New Century Financial shares was suspended on Monday after the second largest US subprime mortgage lender said its banks had cut off credit or indicated their intention to do so, increasing the likelihood of a bankruptcy filing or asset liquidation in the near future.

Anonymous said...

The main purpose of the stock market is to transfer money from outsiders to insiders. It rarely fails.

Anonymous said...

Haliburton moves its corporate headquarters to dubai.
Yes, it's rather obvious that Haliburton doesn't want its corporate records investigated so it's moving them out of the USA to a foreign country where it can hide all its illegal activities....

monster meat said...
This comment has been removed by a blog administrator.
Anonymous said...

Mozilo tomorrow, Tuesday on CNBC, Closing Bell...


Flagg707 said...

Speaking of Leatherface Mozilo - do we have any confirmation of the rumors flying around that Countrywide is conducting major layoffs in their subprime division?


Anonymous said...

Countrywide sold toxic ARM loans tied to LIBOR with a prepayment penalty that will doom anyone who wants to sell or refi.

I hope they go down big. They took advantage of a house buying frenzy.

I would bet that 99% of there borrowers thought they were getting a fixed rate loan that would stay fixed at least for an initial period (2 to 5 years).

Unfortunately, as happened with my friend the only thing fixed about the rate is the starting point for the rate to adjust monthly along with the ever increasing LIBOR. They call this "indexing".

These people mislead many borrowers and deserve to go down.

borkafatty said...

Guns...check!..Ammo...Check...bring it on!!

Anonymous said...

I'm holding Jan 08 $35 puts now up 40% since purchase.I think this stocks heading to $20's within the month?

John said...

Is Option One the H&R Block mortgage company croaking??

David Leaheh said...

I'll be honest with you. I get defensive. I shut down. Sometimes I allow my anger and refusal to admit my shortcomings to build walls between me and my family, my friends. There are moments that I cannot even hear what is being said.

Anonymous said...

Typical Countrywide loan - link from CFC Yahoo message board

Anonymous said...

Boo hooo hooooooooo

Halliburton gets criticized for completely muffing ultralucrative no-bid contracts obtained by political favors

my heart bleeeds....NOT!

and the pseudolibertarian wingnuts complain that their rent-seeking profiteers might actually get some inspection. Wanh wanh wanh wanh wanh.

Halliburton would be nothing without the corruption of the US government and Saudi Aramco.

Your neighborhood pizza joint is more honestly capitalist then them.

Ayn Rand was an clueless yet insufferable bitch.

Anonymous said...

George Soros buy's large quantity of Haliburton stock!

This just keeps getting better and better!

Just follow the money!

Anonymous said...

checkout for subprime lender updates.

bozonian said...

New Century was just the canary in the coal mine. Here is my prediction of what will happen within 1.5 years.

Though I will use hyperbole by saying "all" and "every", realize that I am talking in a most likely, statistical sense. I can also only talk about the Southern California housing market where I live.

The only way houses were affordable was through high leverage, low payment, no down payment loans. These are now gone. This means virtually NO houses will be sold at current prices.

There are several groups of homeowners who will be under pressure to sell, and because they must sell, will be forced to sell at prices people can afford, i.e., in this part of the country 1/3 the current prices. That's right. Prices have at least tripled since 1995 where they were at the limit of affordability given the mortgages and salaries at that time. Those salaries haven't changed and leveraged mortgages are returning to the earlier limits.

The people being forced to sell will be 1) Those who must move for job purposes 2) Those who must sell due to divorce 3) Those who must sell due to inability to keep up the payments on their mortgage 4) Those who must sell due to estate liquidation upon death of owner 5) Those who must sell for miscellaneous reasons.

There's no way out for these people but to take a loss of some kind.

They will of course, not want to get stuck owning 300,000 dollars or more, so they will have to default (after setting up their escape to an apartment before their credit rating tanks).

Once examples of lower prices become apparent due to the above, house prices will start falling even for borrowers able to keep their mortgage payments. Once it becomes apparent that prices are dropping rapidly, those people who have equity and brains will want to sell as soon as possible and will chase the market down. That's when the real buyers' market will occur and you can offer 20% or more less than the seller is asking. And then at the closing when their hopes are at the highest, take another 10% off your offer due to "changing market conditions".

This will be "Harvest Time" for the people who waited out the bubble.

Those who have no equity will be stuck holding onto an asset they cannot sell, and will not sell because they will be clinging to the hope that prices will bounce.

Once the prices bottom you'll have millions of people owing 2 to 3 times what their houses are worth. At this point, I cannot predict what will happen. Most people try their best to keep their commitments but that is a huge burden to bear. If you could own a house just like yours down the street for 1500/mo instead of the 4000/mo you are currently paying, what will you do? That's a tough one.

Dimitris said...

Countrywide foreclosures are piling up... I wrote a small script that goes out to their site and gets the total count of foreclosure activity. Here's the link for anyone interested

Countrywide Foreclosures

It will update on a weekly basis.

LauraVella said...

Funny how Countrywide advertises as "non-prime" instead of "sub-prime"!!!

I guess this wording is sapose to make all "sub-primers" feel better about their toxic loans!

Lay off the fake tan, Mozilo said...

Mozilo, the tanning bed abusing freak of nature is on CNBC right now trying to spin like crazy at the same time all mortgage lenders are getting hammered on the stock markets.

Too comical.

Anonymous said...

guy across the street asks 700,000 takes 500,000, i did not think it was worth 136,000, the place was bought on borrowed money, nice work here, sitting on my butt, making more in appreciation, than any job, id find, realy should get out ,quick,as no one is lending cheap anymore, and im not a fan on the yearly tax, on 500,000, but i enjoy the fruits and veges i planted all over the neighborhood