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]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.