A day after the news broke that Countrywide Mortgage was having a bit of "financial problems"..customers lined up by the hundreds to yank their money out of the banking end of the corporation.Countrywide Financial tried to assuage the worry and fear that they were going under. They are the biggest mortgage company in the nation, but they also were loaning money to folks that could not afford the homes they were buying. From an LAT writeup:
The parent firm borrowed $11.5 billion Thursday by using up an existing line of credit from 40 banks, saying the money would help the lender meet its funding needs and continue to grow. But stock investors, apparently alarmed that the company felt compelled to use the credit line, sent Countrywide's already battered stock down an additional 11%.
That doesn't send a warm and fuzzy message to Wall St. does it? Nor does it send a good message to their customers..the LAST folks they need storming the doors to withdraw their hard-earned cash. Some branches actually ran out of cash and customers were forced to leave their names and get on a list to withdraw their funds.
But, if you listen to Wall St and those wonderful folks in high finance..the housing market problem is just a little blip on the screen..right pal..shades of the Great Depression to me. Countrywide was playing fast and loose with the loans it was making..like many of the Mortgage brokers..as witnessed by this tidbit from the LAT writeup:
Countrywide recently was funding about $40 billion a month in mortgages. Of those, about half qualified to be sold to Freddie Mac or Fannie Mae, and half were "nonconforming" loans the agencies don't buy, including sub-prime mortgages to higher-risk borrowers as well as jumbo loans, which account for 43% of all mortgages issued in Southern California.--Sub-prime is code for a shaky loan evidently.
tags: Countrywide Financial, mortgage industry, housing market
EDIT: If you want to know how bad off Countrywide is..here is a comment from a fellow blogger that I want everyone to see from my comments section: "Countrywide has my mortgage and it has nearly doubled in amount since last year which is why I'm trying to sell my house. No, it's not an ARM nor have I refinanced the loan or been late on any payments--in fact before it went up so drastically I was paying extra against the principle. They didn't pay my escrowed insurance, either, which I had to pay out-of-pocket to be reimbursed in June. Have I seen the reimbursement yet? Ha ha, good one! There's a website with hundreds of complaints about CW called "Countrywide Sucks" or something like that. A class action suit was mentioned on the site but I don't think there is one, yet."--Thats fucked up and I hope to God they all sue.
