September 13, 2007

Countrywide Secures Another $12 Billion As Application Volume Falls

Countrywide has secured an additional $12 billion in “borrowing capacity through new or existing credit facilities” (good news for those waiting to fund), but also reports that year-over-year application volume was off 12% - and down 19% in terms of dollar value - at the end of August (not great news as a measure of potential "demand").

From Rumor To Reality: Up To 12,000 Layoffs At Countrywide [SocketSite]
Countrywide Shares Gain as $12 Billion Borrowing Limit Arranged [Bloomberg]
What Happens When It’s Time To Fund? We’ll Have To Wait And See [SocketSite]

First Published: September 13, 2007 9:24 AM

Comments from "Plugged In" Readers

My biggest concern is, how are they going to pay any of this back??

Posted by: J at September 13, 2007 10:03 AM

These are all secured loans. Countrywide is a huge corporation with lots of assets. Such assets include huge pools of mortgages which may have dropped in value somewhat but are still worth billions. It also has lots of other holdings. Even if Countrywide goes bankrupt, these lenders will be at the front of the line to collect. Stockholders and unsecured creditors would lose out, but not the big boys financing this latest injection of funds.

Posted by: Trip at September 13, 2007 10:09 AM

Makes sense, I suppose I'm anticipating their "assets" to drop further than they actually might.
Then again, you can certainly save some money by laying of thousands of people.

Posted by: J at September 13, 2007 11:12 AM

Someone remind me... how long did it take for Countrywide to blow through the first 12 Billion that they just got, not to mention the additional 2 Billion injection from Bank of America?

this stinking dog rots more by the day.

Countrywide is trying to remake itself from Mortgage Lender to BANK. (through its Countrywide Bank arm).

Not sure how successful they will be.

I'm not quite yet ready to pronounce them done... but it's getting closer every day.

And I hate to say it, but 12,000 layoffs is not enough to keep them going. it's just the first stage.

Posted by: ex SF-er at September 13, 2007 1:21 PM

Boy, who needs a rate cut when a zombie bank can go out and raise $12B in the markets every couple of weeks?

Median home prices are holding up (or according to Frederick, increasing by leaps and bounds), even dying businesses can get more money than the GNP of most countries every couple of weeks, so who exactly needs bailing out with a rate cut?

Posted by: tipster at September 13, 2007 1:42 PM

At this rate, the median home price in SF will be over $2 million soon. Of course, there will be only 6 transactions per month by then....but at least the median went up!

Jokes aside, I find it difficult to believe that CFC will blow up. ex SF-er is right on all accounts, but this is the biggest mortgage lender in the US. If they fail, can you imagine the psychological effect on global markets? Unlikely the government lets them go under. Bailouts in various guises will continue til they're a going concern again (or are acquired or something).

Posted by: Dude at September 13, 2007 2:43 PM

(or are acquired or something)

bingo.

I agree with you that CW will likely not blow up.

Countrywide as it previously was is done. This is why they are trying to convert to a bank.

They may very well succeed, but they will be a very different entity than they were up until summer 2007.

The real question is, what will Countrywide look like when it's all said and done. I wish I knew... could be taken over by BofA (remember 2 billion dollars in stock?)... could be taken over by another company... could be split up and their servicing company sent one place, their bank another, and their lending platform to a third place. or maybe they will be a bank (and in direct competition with Wells Fargo and Citigroup etc)

who knows?

but the damage to the mortgage securitization process is done. it will be quite a while before investors trust many of the MBS products... they will need to be more transparent in the future... thus it will be harder to package no-doc and low-doc loans, super subprime stuff, and even much of the Alt A... (which was all countrywide's bread and butter)

Prime and jumbo-prime loans should recover faster... (but that's the bread and butter of Wells Fargo... lots of competition there)

Countrywide may be the Sacrificial Lamb... it's big, but so was Enron and Worldcomm... and Countrywide was the epitome of poor lending and isn't a bank. The Fed IS a bank, and it may want to slaughter the non-banks to consolidate lending back with the bank-lenders.

Posted by: ex SF-er at September 13, 2007 4:14 PM

Countrywide is fine.

Posted by: nona at September 14, 2007 11:28 AM

Countrywide will remain fine. Most of their loans are conforming and insured.

Posted by: MysteryRealtor at September 27, 2007 11:01 AM

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