T-minus ? until Countrywide goes under.. . .

NEW -> Contingent Buyer Assistance Program
mino - Sorry, I should have been more clear. I was writing of the creditors only, thus the last 11.5 will be the last of the creditors to be paid. Then the bond holders, then the preferred stock holders, (if there exists preferred CFC), then the convertible, and then last the common stockholders.
 
My call is BofA basically said the servicing rights+fees from doing conforming loans was greater than the value of the mortgage assets they hold minus warehouse lines and legal/accounting liability CW has. If they genuinely were not sending out 1099s to their brokers the legal liability could be a nightmare. If Delta is selling subprime at below par my guess is any subprime Countrywide has on their warehouse lines currently is worth below par. I suspect this could massively slam into BofA's face with the right trustees for the creditors. The question is could Countrywide auction its servicing rights now or is that right co-opted by the $2B BofA provided. I suspect there are other possible bidders for that asset.
 
Awgee





<em>"Sorry, I should have been more clear. I was writing of the creditors only, thus the last 11.5 will be the last of the creditors to be paid. Then the bond holders, then the preferred stock holders, (if there exists preferred CFC), then the convertible, and then last the common stockholders."</em>





That could be very true but unless we knew when the lines of credit were established it's anyones guess. Some lines of credit could be very old and they just kept amending them and upping the lines.





Bishie....personally I think BAC is hoping that CFC can transfer over all of its loan business to the thrift side which gives them a little more protection. At which time it puts BAC into a very good position to purchase everything out right.
 
<p>I would love to be in BAC's shoes. Talk about laughing all the way to the bank, BUT I guess they will have to take some amount of risk. It just depends on how much they will purchase it for.</p>

<p>good luck</p>

<p>-bix</p>
 
<p>Well another Friday for CFC is not looking good. Down 4% just this morning to $ 17.70. I thought that $ 18.00 would hold up longer ? They have to be burning so much cash right now. How long can they survive without another infusion ? Also all that REO property they have on the website. Its over 2.5 Billion in 12,000 homes. I guess BAC can just sit and wait till the value of the company goes to zero and then pick the pieces off of the dead body. I wonder about the employees and the retirement money. Another Enron in the making for the poor stupid employee`s. While Mozillo laugh`s all the way. Something`s just not right here is it ? </p>

<p> </p>

<p> </p>
 
Trooper....if they have a guaranteed pension fund then more than likely it will be taken over by the PBGC, which is a government entity. However, anyone that has stock options or a 401K that is heavily invested in CFC stock well I hope they are ready to work for a few more years.
 
If CWC is like all the other companies, it severely underfunds the employee's pension and covered it up in their books. PBGC will have to come in but then the employees get like 10 cents to the dollar. I have a feeling that a lot of stuff is going to come out if CWC goes bk
 
<p>I am psychic, see!!</p>

<p><a href="http://biz.yahoo.com/prnews/070907/laf060.html?.v=53">http://biz.yahoo.com/prnews/070907/laf060.html?.v=53</a></p>

<p> </p>

<p> </p>
 
<p>" Migration of the Company's residential lending business into its


federally chartered thrift entity, Countrywide Bank, FSB, will


continue. This is expected to enhance and strengthen Countrywide's


business model by delivering greater and more stable liquidity, reduced


borrowing costs and greater operational efficiencies. By September 30,


2007, the Company expects that almost all residential loan production


will be originated within the Bank"</p>

<p>Yes, I recall this was CFC's way of skirting the new Basel II Accord - the regulatory action aimed at protecting the international financial system. <a href="http://en.wikipedia.org/wiki/Basel_II">Basel II - Wikipedia, the free encyclopedia</a></p>

<p><a href="http://paper-money.blogspot.com/2006/11/countrywide-lending-compelled-to-get.html">Paper Economy - A US Real Estate Bubble Blog: “Countrywide”, Lending Compelled To Get Thrifty!</a></p>

<p>"If the conversion to a savings and loan were approved, Countrywide would NOT be regulated directly by the Federal Reserve or Office of the Comptroller of Currency but rather by the Office of Thrift Supervision".</p>

<p>"It will be interesting to see if Countrywide will be able to pull off this regulatory side-step, if not, it will most likely take a substantial hit to share price as the market prices in the dramatic decrease in loan originations that would occur as a result of having to abide by the new, substantially more limiting, mortgage lending regulations".</p>

<p>Sneaky bastards.</p>

<p> </p>
 
<p>Actually, the OTS is no fly by night agency. Hubby's bank is regulated by them, and they make sure you run a tight ship.</p>

<p>Also, the OTS is going through <a href="http://www.fdic.gov/regulations/laws/federal/2007/07AICnoticeBasel14feb.html">the admin procedures for applying Basel</a>.</p>
 
<p>Haha! Oh come on, Mozillo's not that smart!! </p>

<p>Notice how they waited until Friday after the market closed? Its actually trading up after hours.</p>

<p>ES, perhaps he and I work for the same company?</p>

<p>I just totally owned a double-double with onions by the way!!</p>
 
I'm sorry, LM, I'm not going to believe you until you show your blackberry and I make sure that you do not go get a mystic tan more than once a day.





I noticed that too. . . the up trade is a little weird. . . I guess some people think the cut is a good thing.
 
<p>>>So why did they switch to OTS regulations. What's in it for CFC to have done such a thing ? </p>

<p>It's not the whole company. As I understand it, it's just the home lending operation. I want to think the speculation as to why is out there on the interwebs but I can't recall what the reason was exactly. I think it was to transfer the liabilities to the bank for a gov funded bailout if needed, a la the S&L crisis.</p>
 
<p>The reason behind going to OTS is they will have less restrictions on debt levels for borrowing/having mortgages in their portfolio. It doesn't change it by all that much. Plus they would be able to borrow more through the Fed which is cheaper. They need this since they have been dependent on the now dead commercial paper market and even if they could get a deal done it would be expensive. They are also limited to what they can borrow against their bonds because of the drop in price and if they issue new ones the rates would be too high. </p>

<p>The likes of New Century who just used warehouse lines which is typically the 3 month libor + 3% roughly 8.5%. So keeping a bunch a loans there that were collecting 8% is a money loser. and that is why they would quickly sell them. CW thought that they were in the clear because they could "park" the loans against the commercial paper at a rate of 3mo. libor -1% roughly 4.5% collecting a nice spread. They also "parked" loans against their bonds which range from 4.5% to 6.75% at a par value and again collect a nice little spread. The problem is when the value of the bonds drop they can't "park" as much there so they have to move it. Then the commercial paper market died and they couldn't get any new commercial paper which has a term typically of 270 days. This is when the panic set in and they had to call their friends.</p>

<p>I said when all this started I would help explain what happened and while it is weeks later, there you go.</p>
 
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