If I worked for Countrywide, I think I'd be sharpening up my resume.....

"Furthermore, as a result of lessened liquidity for loans which are not eligible for delivery to the GSEs, Countrywide has materially tightened its underwriting standards for such loans, and, we now expect that 90 percent of the loans we originate will be GSE-eligible or will meet our Bank's investment criteria.

Doesn't Countrywide have a high perentage of Neagatively Amortizing Option ARM loans in their portfolio?

I beleive that they have been recognizing the negative amortization as income from these over the years.

I would venture to say that the market for these loans is not so hot right now.

If they ae forced to mark these loans to market they may be insolvent right now.

There is also a chance that they have been overstating income on these loans. Will they be force to restate prior earnings?

I wouldn't want to be their CPA firm right now.

I guess it was fun for them while it lasted.

this is scary. just frightening. I've been a bear but i'm just flat out scared.

Start looking at loan contract fine print for the words “first born…collateral”.

How worried should I be that '40 of the World's Largest Banks' have agreed to give these guys $11.5 billion in an unsecured credit facility?

$11.5b here, $11.5b there and pretty soon you need a bigger container.

"Sambol concluded. "With these changes, we believe we are well-positioned to "leverage" opportunities presented by a consolidating industry."

Some people never learn isn't "leverage" what got them into this mess?

Tanta, that line is called a "revolver" because CFC has a gun pointed at the banks head to give them their loan.

OT, but this is where the action is.

Yesterday was an important deadline day for requests for fund withdrawals. Question: Do ‘requests for withdrawal’ numbers have to be filed for public record by funds or can those numbers be held close to the chest of fund management? And if those numbers must be publicly stated, how soon must those numbers released? The same day, 48 hours, 1 week, 30 days…?

you've lost me, that's before my time, just like magnetic tapes and "LCRs"

CFC now around $18.50 up and down. Yahoo has a one year target of $36. LOL.

"Furthermore, as a result of lessened liquidity for loans which are not eligible for delivery to the GSEs, Countrywide has materially tightened its underwriting standards for such loans, and, we now expect that 90 percent of the loans we originate will be GSE-eligible or will meet our Bank's investment criteria."

Of course they skipped the caveat that this means 90% of their customer base will no longer be eligible for loans.

Fog a mirror/read between the lines of a CFC press release.

Scared and amused is right. Mostly amused for me though, scared for friends and family.

New operating environments require new terminology. Some modest suggestions:

Capital Detests Opacity
Collateral Damage, Organized
Countrywide Doesn't Operate
Concentrated Disaster Obfuscation

Mix and match the above with the posts since last night to discover the individual muses for Hours of Fun.

CFC has about $190bn in liquidity sources before having to tap the Fed Funds market.

A few things....
Where did you get this information?

CFC can access money for loan origination, but that's different from running out of money for operations. They can't tell the providers of liquidity that the money will be used for loans and then use it to pay for their employee salaries.

The problem is lenders, like CFC, can't sell their mortgages and have to eat them. Imagine that. CFC is stuck with the crap they tried to sell to some unsuspecting SOBs. It's kind of like if GM complained about their empoyees having to drive Buicks.

Hey, I didn't get a harrumph outta that guy.

p.s. "video store"? is that like where you get "magnetic tapes"?

"This market is going down like free beer - we continue to have concerns on the credit side of the balance sheet, with Countrywide tapping an entire credit line to shore up its business,I would say if there had been a day when we're trying to price in worst-case scenario, this might be it." said Art Hogan, chief market strategist at Jefferies & Co.

Cheers!

lol, should be Dutch renter

Does anyone know the banks that are on the hook for this money? I know there were a handful that had gone in on the credit line.

It would be interesting to see who is on the hook potentially.

So break this down for a former History major if you don't mind.

Countrywide said they had Scrooge McDuck sized piles of cash last week, more than enough to keep making loans and to pay anyone who needed to be payed. Now they borrow 11.5 billion.

Were they lieing or did things really go that bad that quickly?

I think, from their June 10Q CFC had 8.1 billion of uninsured 90%+ LTV loans on the books, up from 7.3 billion in March. That sounds like a lot of high risk lending during those 3 months - I wonder if they had intended to sell it and couldn't?

I'm a Regular Joe (without an MBA, so excuse the ignorance) with good income, FICO of 750, shopping for mortgage, went with broker (loan will be through Suntrust), and now the Countrywide rep keeps calling and saying, "Please, I want your business. Let me run some more numbers." Would someone please tell me how stupid going with Countrywide for my home loan would be on a scale of 1 to 10? (And provide the reasons why so I can get this guy off my phone?)

rcryan,

Sorry, Just got back from throwing up.

Gives them a bit of time, but also signals they are in desparate straights. If they survive, I imagine their cost of funding will go way up.
Maybe Banker can chime in with better insight.

How about I second your analysis. One minor additional thing. In this world, if I were anyone who relied on funding I'd be worried that if I didn't use it I'd lose it, soi I'd draw down on every nickle I could find at this point.

Why is CFC too big to fail? Right now the industry is getting in a liquidity trap. CFC funded 38B of loan last month. Question here is how many previous loans has they been able to securitize? And what is the situation with their warehouse line now (did their lender raise the margin, pull any line?). Asset doesn't really matter if they cannot convert to cash in this environment. Right now we know that they get shut out of the CP market as of yesterday and draw down all their credit line today. The next step will depend on what happen to their warehouse loan and if they need to sell asset to raise money quick.. This is not very different that NEW, AHM, IMH and countless other mortgage lenders went through in the last 5 months becuase of EPD problem and need to raise cash fast. They all get into a situaion where the lender raise their margin and pull warehouse line. Some come through and other don't... Remember CFC expanded their operation (buying loans and funding more loans) since the subprime melt down starting March until July... There is a lot of loans that they need to securitize. They came out and said that they have enough cash for 08.. So will see..