MOST IMPORTANT POST EVER

NEW -> Contingent Buyer Assistance Program
<p>For those of you who are night owls. I am going to start a thread in hopefully less than an hour on the sales data compared to the 90s with adjustments for housing stock. If you thought that July 2007 was the worst on record wait until you see what I think is in store for August. </p>
 
Contrary to the belief of many housing bulls I think August will mark the month the high end starts markedly weakening in inventory. When I talk to people buying in the $1-2M range they blissfully tell me the high end is not affected by this subprime/jumbo loan melt down since their neighbors are move up buyers. During the bubble era I would see $2-3M product sold nearly entirely 100% LTV (out of a 200+ unit project in that range 2 houses had below 90% LTV). August has been a punishing month to the very rich and many of them are dumping their houses on the market. So places that were hot like Atherton and the Cote D'Azur will eventually get their comeupance and the fools of the high end will lose real money in many cases not lender's money. Remember Beverly Hills, Malibu, and Pacific Palisades all fell approximately 35% the last cycle. I expect that this cycle will be no different. Meanwhile I am trying to convince an ex that no buying a $2.1M house and taking on 50% leverage does NOT make sense...even if you believe you made 100k ignoring my advice to buy a $1M house all cash last year. She was going on about being priced out forever. I responded this was a myth. Time will show who had the stronger argument.
 
<p>How long will $11.5B last CFC? </p>

<p><a href="http://news.yahoo.com/s/ap/20070816/ap_on_bi_ge/countrywide_mortgages_2;_ylt=AlTLEe53PNwb7LzQlj3p4QIE1vAI">http://news.yahoo.com/s/ap/20070816/ap_on_bi_ge/countrywide_mortgages_2;_ylt=AlTLEe53PNwb7LzQlj3p4QIE1vAI</a></p>

<p>And more importantly, what will the private loans do to their rates since they're now rated the last step above junk bonds.</p>
 
<p>according to an insider rumor, which I cannot confirm to be true, but I trust the source, CFC is planning to file for BK by sometime next week. If you are a broker try going to cwbc.com and submit a loan. I bet it says..."no longer accepting submissions"</p>

<p>The title of my thread is now becoming more apparent by the hour</p>
 
<p>After getting 11 billion in funding? That would be incredible. The bk, not the layoffs.</p>
 
Janet....those lines of credits were really never their for them to pull from, atleast not all at once. If they are only brokering conforming loans of Freddie and Fannie then they are in deep do-do. Also, remember they have to have reserves for all the other crap that they have sold the last couple of yrs.
 
<p>My guess would be the $11B is already spent. I suspect, they were 'informed' by one of their major MBS holders that they were returning a substantial underperforming asset.</p>
 
Just saying the $11 billion is now at risk, when it wasn't yesterday. The banks could have pulled them, but didn't.
 
CW's debt was downgraded which means they are having margin calls. Tapping that credit line is a last resort to meet those margin calls. Moodys and S&P by downgrading their debt is like shooting someone in the lung. Mozillo in their 10-Q even said if our debt gets downgraded we are going to have problems.
 
<p>The 11bil+ they maxed out was "used to fund operations". This means that countywide would have been insolvent if they did not use the lines of credit. So how are they going to continue doing business? Either they have core deposits (customer accounts & FED money) or Private equity firms give them money. Since they are not a savings bank, and private equity firms won't touch REITS with a 39 &1/2 ft pole (bad grinch analogy), I think they are a dead stick.</p>

<p>When you look at the business model, it's amazing that this company got this big. They provide no tangible goods or services. Their entire business is dependent upon delivering other people's money to borrowers. Its really amazing if you sit down and think about it. Every loan they funded was on a credit line from a brokerage firm like Credit Suisse, Lehman Bros, Bear Stearns, or Deutsche Bank. </p>

<p>The B-52 Bomber just flew overhead and opened its payload doors on Calabasas.</p>
 
<p>I know they're in a major bind. I was in mortgage forever, and know it well.</p>

<p>My comment was only addressing an imminent bk.</p>

<p>Why would the banks not just pull those lines, and not have to fight to be paid back, if they're really done.</p>

<p>Now a deal made for layoffs make sense.</p>
 
Unfortunately, we have lots of companies, outside of mortgage, who have a curious existence.
 
First Magnus is the latest to fall (16th largest lender)





Good discussion about Countrywide: <a href="http://www.cnbc.com/id/20303266">www.cnbc.com/id/20303266</a>





Too long to post but the gist is that the reporter was told that CW is "too big" to go bankrupt.
 
I watched a reporter in front of Countrywide today, talking about it (and Amgen) and how hard Calabasas/1000 Oaks might fare. She spoke of how hard the area was hit when big defense pulled up stakes in the area in the early 90's. Ironically, it appears to be coming full circle again....Countrywide's HQ (the compound and buildings) was Lockheed's old HQ..... who's next?
 
<p><em>Too long to post but the gist is that the reporter was told that CW is "too big" to go bankrupt.</em> </p>

<p>Told by Guy Cecala, editor of <em>Inside Mortgage Finance</em></p>

<p>"He also says Countrywide is no worse off than the mortgage industry overall "</p>

<p>Honest question, would that be like David Lereah of NAR fame saying the builders are too big to fail?</p>
 
You must log in or register to reply here.
Back
Top