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

NEW -> Contingent Buyer Assistance Program
<p>Can I ask an honest question?</p>

<p>Are you rooting for a Countrywide failure as a stock play?</p>

<p>Or, is it because it will precipitate a further decline in housing?</p>

<p>Some other reason?</p>

<p>I, for one, would never wish that 62,000 people would be sent to the unemployment lines.</p>

<p>I don't think any good will come of it.</p>

<p> </p>

<p> </p>
 
Janet, I'm not rooting for anything.. . I'm just commenting on the situation.





I don't want anyone to lose their jobs but Countrywide, like the dot.com companies, got too big, too fast, and based upon fishy economics. I think Countrywide, as with all the other lenders, got greedy and tried to capitalize on a bubble. The reason why CW got so big was because they began practicing irresponsible lending standard and failed to stick with smart economic sense. CW (and Mazillo) would not be in this situation if they just remained satisfied with slow and steady growth, as opposed to joining into the gold rush. There are a lot of responsible lenders out there that stuck with their guns and did not do subprime or alt-a loans.





Again, I don't want anyone to lose their jobs but the number of jobs supported by lending/mortgage industry will fall, just like artificially inflated housing price. As I have commented previously, I was in the bay area when the dot.com bubble burst and the loss of the jobs was incredible. I felt bad for them but their jobs can as a result of illogical fervor and crazy economics. I know a lot of people who left good jobs at major computer companies to start/join startups and got burned. I feel bad for them but it was their decision to do so.





It's like the mortgage brokers and real estate agents. . . they cleaned up during the bubble and now are suffering. But every level headed agent knows that housing is cyclical. I cannot feel bad for an agent/broker who took the money they made in the last 5 years and blew it all on nice cars and fancy vacations without any concern for the future. Meanwhile, I worked my butt off in law school and worked 75 hours weeks and still have a tube tv and my compact car. It's the whole ant and the grasshopper story.
 
>>>I, for one, would never wish that 62,000 people would be sent to the unemployment lines.

<p>I don't think any good will come of it.<<<</p>

<p>They were hired under capitalism, they could very well be fired under capitalism. </p>

<p>Plenty of good will come of it. It is just long term and you may not see it. You may just see the short term increase in the unemployment lines.</p>
 
<p><em>I, for one, would never wish that 62,000 people would be sent to the unemployment lines.</em></p>

<p>Well, 62,000 won't go to the unemployment lines. Maybe 10,000 if it Bks, possibly 20K. Maybe more. It depends on how CFC is structured in internal business and how many of the 62,000 people owe their jobs to Neg-AM loans and mortgages with no-doc at low rates.</p>

<p>I'm not sure how bad a CFC failure would be for the banking, mortgage, & credit industries, but something that potentially makes it clear that the lender is on the hook for lending to poor prospects is needed, IMHO. </p>

<p>Sooner or later it will be bad, there's no escaping it, we will need to live within our means.</p>
 
Having them downsize, change guidelines and shaving half their market-cap doesn't do the trick?
 
BTW, CW will not go under. .. B of A will buy it up and make it their home loans department. . . job loss will happen but it'll probably be somewhere in the range of 10 to 20K
 
<p>It doesn't matter if the message has or hasn't been heard. It matters if the jobs have no reason to exist.</p>

<p>That's the crux of the bubble. It created jobs that have no reason to exist. They also happen to have paid very well in SoCal.</p>
 
<p>" They also happen to have paid very well in SoCal."</p>

<p>And?</p>

<p>Countrywide does jumbo.</p>

<p>Countrywide does conforming.</p>

<p>Where would you suggest we all go in the future? Do you see a future with no competition?</p>
 
<em>"Can I ask an honest question?</em>

<p><em>Are you rooting for a Countrywide failure as a stock play?"</em></p>

<p>Absol____inglutly. This is my fourth short trade on CFC. Two of the four have been delicious. The last trade is a reup of 11% of the profits of the last two trades and is a play on CFC bankruptcy. If CFC does not go bankrupt by Jan 09, I lose a bit of my profits. If, however, CFC does go bankrupt by Jan 09, I triple my profits.</p>

<p>Yes, I am rooting for a Countrywide failure.</p>
 
<p>To the person who was considering buying Countrywide puts, my advice would be to only buy the amount that you would be "comfortable" losing if it turns out CFC has now bottomed out and the options expired worthless.</p>

<p>My puts were bought several months before it was widely known Countrywide was in trouble. They've now tripled in value, but before the Countrywide situation became headline news the puts had lost 50% of their value - so you have to be ok with very wide fluctuations.</p>

<p>Give yourself plenty of time window - I bought Jan 09 puts back then because I had no clue when this debacle would happen (if it did). 3 months for CFC to go to zero sounds kinda aggressive to me. This is the largest mortgage lender we are talking about, and the chances of some attempt of a goverment bailout are pretty high imho.</p>
 
<p>Yeah, I don't see CFC going bankrupt. They'll be bought out before they get there. That doesn't mean their shares don't plummet before then, however.</p>

<p>Full Disclosure: My money is sitting on the sidelines.</p>
 
<p>Janet, I don't think you're following. When I say they create jobs with no reason to exist, I mean many of the jobs exist because of the credit bubble, 0% risk premium, and low inflation environment creating excess demand for the service. When the demand is removed, the jobs, like the housing market, are no longer supported by fundamentals. </p>

<p>Will underwriters, loan processors and mortgage brokers/agents still be necessary, yes. However, substantially less are needed when the requirements to borrow money accurately reflect the costs and risks. IOW, if you are doing No-Doc loans with 0% down you may need 10 people, but when you need to do 10% down and full doc, you only need. </p>

<p>The "have paid very well" comment is related to the pay of the sector. RE Agent licenses and the number of mortgage brokers and anything related to loan processing have soared with the bubble. In general, during bubble years, those positions have paid well due to the compensation structure of the credit and RE markets. </p>

<p>Like Joseph Kennedy said in 1929,"when your shoe shine boy tries to give you stock tips", the transition of 'barristas', nightclub bouncers, and deli counter-workers to RE Agent-hood, mortgage "broker" and real estate investor, maps a little too well. This isn't to say they shouldn't strive to climb the economic ladder, nor say they should stay in their place, it's a question of did the people transitioning to those roles really have the skills to succeed in it and more importantly, did they have the skills and knowledge to accurately represent the kind of financial deal they were part of?</p>

<p> </p>
 
<p>All acceptable points.</p>

<p>I simply do not understand the extra wrath for Countrywide.</p>

<p>Name me one institution in the sector that did not profit handsomely from the run-up.</p>

<p>Name me one institution that made only conforming loans.</p>

<p>If one is dirty, they're all dirty.</p>
 
<p>I always thought Countrywide was fairly "ethical" since they are a big company, although I have never used them for loans (my mortgages were from Wescom, a very good credit union, and Wells Fargo). But read this story <a href="http://www.nytimes.com/2007/08/26/business/yourmoney/26country.html?_r=1&oref=slogin">http://www.nytimes.com/2007/08/26/business/yourmoney/26country.html?_r=1&oref=slogin</a></p>

<p>by Gretchen Morgensen in the NY Times, a very respected business writer, about the unethical practices of the Countrywide loan teams, how they screwed over their customers and took money from them to line Angelo's pockets even more. Pretty eye opening expose of the Countrywide business model. They really should go down in flames.</p>
 
<p><em>"I simply do not understand the extra wrath for Countrywide."</em></p>

<p>Wrath? Wrath is a waste of time and energy. It's about making money.</p>

<p>Personally, I don't care what type of loans they made, what type of loans anybody made, or how much they profited from them. I don't care who flipped what or how much money so and so made or didn't make. I care about the odds on future events and how to make money on them.</p>
 
<p>One thing I've learned from reading all the stories about CW and other brokers is that you will have to read every sentence of that final contract prior to signing it because they will do whatever they can to sneak in something which will line their pockets at your expense.</p>

<p>It's a BS game that people shouldn't have to play when making "the most important financial decision in their lives."</p>

<p>That people/companies got extra wealthy playing these games during this boom makes me have NO sympathy for them when they head to the unemployment line/bankruptcy. Good riddance!</p>
 
<p>I read that story.</p>

<p>I believe it was sensational and slanted, IMHO.</p>

<p>Case in point:</p>

<p>The story talks of the evil prepayment penalty. Investors demanded them in return for their aggressive pricing. A borrower could have bought it out, if they were not commited to the loan. Why should an investor purchase a loan at a premium, and have it evaporate 4 months later? I don't see it as a scandal - I believe it was quite transparent, in most cases. Lots of people coming out of the woodwork now. Those same people couldn't close on their loans fast enough.</p>

<p> </p>
 
<p>There's no wrath for Countrywide. <em> </em>I don't cringe at the thought job losses or a tighter credit market create through excesses. If they go down, they go down of their own making. However, I do think the market as a whole needs some high-profile examples of our pervasive the credit bubble was into mainline businesses.</p>

<p><em>If one is dirty, they're all dirty. </em> </p>

<p>Hence my laisse-faire attitude. i'm not worried about job loses in the sector because largely, IMHO, too many jobs were added with no added value. I also suspect that we'll over-correct with job losses in the sector. </p>

<p> </p>

<p> </p>
 
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