September 07, 2007

As housing prices suffer "sudden, severe and deep" depreciation, "ENRON 2.0" Countrywide Mortgage predictably melts down

Great expose on Countrywide (I'm short CFC) - one of the leading causes of the Late Great Housing Bubble, and soon to be one of the biggest victims (goodbye 61,000...).

Also, isn't it funny that Countrywide is crashing because, as they say, home prices are "depreciating like never before", with "sudden, severe and deep" depreciation, yet the reported median price is supposedly down just slightly?

In other words, Countrywide is now telling you what's really happening out there (now that Orangelo has sold his shares). The NAR and the US Government are not.

Countrywide's message of confidence turned to crisis - CEO forecast the lender would 'shine' as the industry changed. Later, he said the firm knew the bubble would burst.

A year ago, Countrywide Financial Corp. Chairman and Chief Executive Angelo R. Mozilo was boasting that the looming shakeout in home prices and hike in mortgage interest rates would usher in a period of remarkable prosperity for his company.

"I have 53 years of experience. . . and this is nothing compared to 25% prime and 17.5% mortgage rates and 10% unemployment," he told a conference of bond investors last September, pooh-poohing the effect of rising rates.

"This is when we shine," he said, calling Calabasas-based Countrywide "an industry leader" and "a role model to others in terms of responsible lending."

Today, the picture looks much different. Countrywide's financial reports and recent comments by Mozilo and other executives show that the company, the nation's largest mortgage lender, has been less a role model in the home-loan market than a prisoner of competitive trends.

The tone of executives' comments has gone from complacent to almost apocalyptic.

"We are experiencing home price depreciation almost like never before, with the exception of the Great Depression," Mozilo said in a July 24 conference call with securities analysts.The company's traditional frames of reference for the performance of its loan portfolio, he added, may no longer be "a fair comparison in light of what is happening to real estate values."

But the "sudden and severe and deep deterioration" in home values has thrown many borrowers into delinquency because homeowners with little or no equity have been unable to refinance their mortgages to reduce their rates.


hendry said...

OFHEO says prices are still going up while NAR says it's barely down. A few delusional flippers believe them.

The rest of the sane world knows prices are down over 10% already. In Florida that number is closer to 30% down.

Paul E. Math said...

I'm starting to think maybe Umpa Lumpas shouldn't be trusted with billions of dollars. It seems that when you give them that much money they become utterly corrupted and will say anything or do anything for the cause of self-aggrandizement.

God, I can't wait to see Orangelo in a jumpsuit that matches his lying, corrupt, orange face.

Anonymous said...



Adam said...

Can I embed images? Let me try...

edit: nope.

If not:

First try. God, that CW 'house' logo looks like it was done in MS Paint.

What you were thinking or no?

borkafatty said...

Similar situation for sure...this meltdown is in full Mother F*CKING E-fis-ect....Oh and did anyone take a peak at the Dalla...below 80...Hello $7.00 box of cereal.

PhoenixSucks said...

I say that we start a mac & Cheese and ramen fund. We can deliver them to Countrywide offices nationwide.

Anonymous said...


I've been something wrong with my ENRON and Worldcom stock?


Anonymous said...

BAILOUT folks. No way CFC is allowed to fail. Nobody knew what he hell Enron did. Nobody ouside of Houston and Wall St even knew they existed. CFC on the other had owns 20% of all mortgages. If they fail it will be panic on the streets. No way government lets that happen and they shouldn't.

Anonymous said...

The MSM doesn't cease to amaze me. Now they were caught by "surprise" with the weak unemployment numbers. Geez, do you think that would happen? Geez, Fast Money guys, do you think? Buuh buh Kudlow has been telling us all along that everything is sooooo rosy out there! BTW, nice call six figure salary-"Wall Street economists", "right on the head" as usual. As we know, the gov and every other crook corporation out there is cooking the books to make the numbers look better, so we can assume that the situation is much, much worse than what they vomit through the corrupt MSM.

" (CNN) Stocks tumble on weak jobs report

Major gauges fall after surprisingly weak employment number; bond prices surge; dollar plummets.

Employers reported that payrolls fell by 4,000 in August, when Wall Street economists were expecting payrolls to grow by 110,000, according to estimates. June and July job growth figures were revised lower."

Anonymous said...

borkafatty said...
Similar situation for sure...this meltdown is in full Mother F*CKING E-fis-ect....Oh and did anyone take a peak at the Dalla...below 80...Hello $7.00 box of cereal.

September 07, 2007 5:48 PM


Why? Cereal is not imported.

Anonymous said...

Phoenixsucks...Thank you from a mortgage broker for the best laugh yet!

k.w. - southern ca. said...

The problem with residential housing is massive - and has been for quite sometime now.

Unemployment is growing, and *no bail-out* of any sort will fix the problem.

Those who read this blog, and others that lay out this problem for what it is, know better than listen to (or google) the popular media.

What we see in residential housing is really scary, and *all* media should take the responsibility of letting people know what's really going on - instead of white-washing the problem with hype and glitz.

Anonymous said...

Where is that raging dummy dopes at? The jobs report sucked today. Housing sucks now. Dollar getting hammered.

rcochran said...

Where is that raging dummy dopes at?


He probably lost it all in a few pathetic stock purchases and/or property plays.

beaver muncher said...

I heard that godzillo is sniffing around looking to raise more money via cw bank.They are going to raise money market rates to 6% soon to acquire new capital to keep the business afloat.Just a matter of time before they go under.Too many bad loans made to anyone w/ a pulse. I love the market today.Time to buy some stocks!!!!! Cramer is at usc today spreading his seed to the hotties at the dorm.

Anonymous said...

It appears Bank of America lost $700 million in Countrywide stock holdings. These bailouts are wasteful and impotent.
Further I think central banks have thrown 1/3 trillion into the abyss since mid August.
If youre wondering why cereal cost $7.00 per box then you aint seen nothing yet. Hyperinflation is in the air.

Out at the peak said...

Longs (on Yahoo message board) still believe "next stop $38." Sounds just like home owners: can't sell it for less than they paid for it yet they'll definitely not get it for years.

diemos said...

"Why? Cereal is not imported."

Worse, it's exported. Those dollars we've been giving the chinese have to go somewhere.

TM said...

I'll date a women who rents. But if she's expecting to be 'serviced' in a LTR, she needs to buy a property first. Not financed, but bought outright. If she wont buy anything, it shows she has no drive for success and needs to be droppped.

Also, I absolutely wont date a women who's a home debtor. That's not even a possibility. It shows she has a poor understanding of finances.



Anonymous said...

Tangerelo must HATE this site

Nice logo

Montpellier said...

I'm sorry, but as much as I love HP and feel 'Tangelo' is part of the problem, I really, really hope Countrywide doesn't tank...'cause they bought my paper. I do not want to spend the next two or three years paying two mtg. payments each month.

Anonymous said...

Kerplop! There Goes Another Bank: Bank of America Loses $700 Mil. on Countrywide Bailout
Increase DecreaseSeptember 6, 2007 (LPAC)--Just two weeks after Bank of America came to the rescue of Countrywide Financial Corp. with a $2 billion "investment," it became a big loser when the Countrywide's stock market share value plummeted below $18 -- the value BoA bought its shares at then. This wiped out $700 million of BoA's profit. The rescue package touted as a bankruptcy-prevention move for Countrywide in the face of the global credit crunch as subprime mortgage loan defaults were rising has clearly been a short-lived resuscitation.

hendry said...

Countrywide will be thrown under the bus and the pieces will be scavenged by the big banks. They will be the scapegoat for bad lending practices. Less competition for the big banks when all this blows over. You didn't think the old money would allow the new kid on the block to come in and take over the mortgage business did you? Orangillo will be frog-marched in front of congress just like the Enron Boys.

gigi said...

I've got my house on land out in the country, well away from the population centers. I'm renting from the bank for much cheaper than renting from a landlord was. I think I'm prepared for either deflationary recession or the more likely hyperinflationary depression. Plenty of ammo and a Honda full of silver.