Countrywide Borrows $11.5B from 40 banks
Countrywide has secured $11.5B in financing from 40 banks in an effort to remain afloat as the mortgage market crashes.
"Countrywide has taken decisive steps which we believe will address the challenges arising in this environment and enable the company to meet its funding needs and continue growing its franchise," Countrywide President and Chief Operating Officer David Sambol said in a statement.
Sadly, this doesn't seem to be good news. From Bloomberg:
"When a company draws on its bank lines, it just basically gives off the impression that it has run out of options,'' said Christopher Wolfe, managing director at Fitch Ratings, which today dropped Countrywide to BBB+, its third-lowest investment- grade rating. "Typically these bank lines are there but not really meant to be used.''What will change for you? Countrywide says it will no longer offer as many "non-conforming" loans. From now on 90% of its loans will be conforming loans or will meet its internal bank criteria. This means that they are essentially no longer offering subprime, alt-A (where you don't submit all the paperwork required for a regular mortgage), and jumbo loans (a jumbo loan is a loan over 417k.)
Countrywide borrows $11.5B from 40 banks [Houston Chronicle]
Countrywide Taps $11.5 Billion Credit Line From Banks [Bloomberg]
(Photo:Bloomberg)
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Comments:
Oooh no Jumbo's ehh so much for getting a loan from them in thier own home state of Cali.
@cashmerewhore: I did FHA loan refi's for a while, usually the originator has a "commitment" form a lender like Countrywide, and the loan transfers after 1-3 payments. It pretty much never moves again (barring serious problems) as FHA's are government insured and very safe to hold.
As far as the article, Alt-a paper is not necissarly no-doc/low-doc. It is more of a "non-prime" designation. Between subprime and prime you fall into non-prime. You can (or should I say could) have no doc loans in all categories.
This is kinda amusing as Countrywide keeps mailing me letters saying I've qualified for a $100k home equity loan. I have my mortgage through them and so far no problems with them whatsoever.
I wonder how this is going to effect my plan to get a HELOC rsn...
How about Countrywide's chairman cashing out of $13 million in stock before all of this garbage hit the fan?
@howie_in_az: Lol I get a bunch of HELOC and refi offers in the mail....the best part is I don't own a home? WTF???
Nice thing to read when Countrywide just called to confirm my employment because I suspect they're buying our mortgage...only we haven't even SIGNED our mortgage yet, we don't close until Monday.
This is all far too confusing for my tastes.
Heh... "no jumbos" is probably an intentional underhanded way to avoid writing loans in CA, since that market is ripe for a price correction. I know lots of people want to live in LA, but then again lots of people can't figure out that you should pay more than the minimums on your cards and don't need a 5000-lb SUV to drive down a freeway to their white-collar job. I can't fathom people paying the outrageous real estate prices out there, and when buyers can't get loans on the stupid prices, the prices will magically (and painfully) correct.
I've read several comments in articles about price corrections in Florida and other places that specifically except CA from the areas experiencing corrections... it'll come, and it'll register on the Richter scale.
i need Oregon to price correct soon, but not here in fly-over land. We are already pretty low to the bottom of prices already.
I'm trying to move my family to Oregon and the prices are not much better than SoCal.
@meiran: Oh I found out at Closing that my loan was automatically being transferred to Countrywide prior to me signing anything. I'm not sure exactly how this will impact our loan terms, but I'm a little scared. Kinda.
Whole freaking stock market is crashing because of companies like this being so stupid they lend money that people physically can't pay back.
I can't even get a FRICKING STUDENT LOAN FOR $5,000 because I have two credit cards, and they managed to get 40 BANKS to give them BILLIONS OF DOLLARS?!?!?!?!
This won't effect anyone with an existing Countrywide loan in any way -- only a problem for prospective mortgages.
@Wormfather: I think execs have to pre-declare sales in advance to help prevent insider trading issues. At least that's what a 4th level manager at my corporation told me one time.
@MORGANLH85: According to what I watched on CNBC when I got home from work, apparently this emergency loan was part of an earlier deal the companies had made. The lady on CNBC said that if they'd had a choice, the banks probably wouldn't have lended it, but they had to as part of the deal.
I've also seen rumors online of layoffs coming for Countrywide tomorrow or Monday. I'm dropping off paperwork at my local Countrywide tomorrow for my condo loan from them, so I may see if my loan manager there is forthcoming on how things look.
And funny moment on CNBC? After all these doom and gloom things on Countrywide, the first commercial was that Countrywide guy offering refinancing. Which then was cut to another commercial after like 3 seconds. Must be someone there realized it probably wasn't the right place to have a commercial for Countrywide.
i relish the thought of their imminent demise, especially if it means i never have to see their skeevy commercials every five minutes again. their business model obviously sucks. this company gets a lot of bad ratings from its customers, too.
you have to remember that subprime loans are but a small portion of the overal company. me being a homeowner and having a CW loan i dont see it affecting me at all.. but i guess some people just have a sour taste in their mouth for some reason.
@onouris.. you have to remember countrywide is a servicer first and foremost. a lot of the loans they bought from brokers who did the bad dealings. plus at some time the consumers buying the houses have to take some heat for signing the papers.
@ambience.. why would a bank be FORCED into lending money to anyone? that doesnt make any sense to me. can you elaborate?
Countrywide bought my mortgage not even 30 days after we closed. Our first payment to the company we financed through was our last. They sent all our bills to my parents address (hello, FHA loan....I've gotta live in the property to qualify....). I've been less than impressed with them. My mortgage can only change hands one more time according to my contract. Let's hope the third time's the charm....