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Countrywide Home Loans: The Real Story (Informative Blog)

Sincerely,

Nima Rezvan

Home Loan Consultant

Countrywide Home Loans

48 Westport Avenue

Norwalk, CT 06851

203.913.6016 (direct)

203.845.2363 (fax)

Nima_Rezvan@countrywide.com (email)

http://www.MyNima.com (website)

Countrywide, America's #1 Home Loan Lender

The highest compliment my clients can give me is the referral of their friends, family and business partners.

Posted by Nima Rezvan First Time Home Buyer Expert CT FHA Loans - FHA 203k - CT Mortgage on 08/17/2007 10:39 PM

Comments (61)

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61 Comments on Countrywide Home Loans: The Real Story (Informative Blog)

AUG

2007

THANKS FOR THE INFO--MIKE

Thank you for the information. Any accurate information in this "the sky is falling" climate is welcome!

Nima,

Now would be a great time to load up on CW stock...

I have a friend in Ma who is a loan officer for Countrywide. He called me this morning to claify and share with me the truth about Countrywide, the stability of the company etc.. Countrywide isn't going anywhere. They are slated for some tremendous growth.

This is good to hear.

Hey Nima,

I would never know there was a problem with all the work you send me, It is clear that the media and your competition is making a big deal of thing, It is clear to me it is a cash flow problem. 11 billion dollar loan would not be issued if CW was failing. This news should not scare people but reinforce the power behind CW. What should scare people is knowing there are loan officer like Leo Namiot that have stated he wants to see CW fail so millions of people lose there home and jobs. As he stated he can profit by these people losses.

Nima, I have been hearing that the 11 billion that Countrywide drew down is their total credit line and also that is is only approximately 10% of their available credit. Can you clarify? Thanks.

Thank you for giving us the "real" story from the inside.

Thanks for the update Nima, I hope that you are right because countrywide is a big player in our economy. With all the negative stuff in the media it has to hurt the trust factor in countrywide and the consumer confidence. Anyone who has a loan in process with any lender with negative press has to be concerned.

I am glad to be out of the large mortgage lender world, too much corp. bs and obligations too meet for their stock holders and high rates to pad everyone up the food chains pockets...

It's unfortunate some arent able to handle the issues working for a big company.
There are obviously positives and negatives working for both smaller companies and bigger companies.
It sounds like Leo has found a home he enjoys and likes. I wish him the best.

I hate to be doom and gloom, but... doesn't the coach that is about to get fired get a "vote of confidence" just before the ax falls?

I am just saying.

I hope CW stays around.

I appreciate your sharing this information. Misinformation and hysteria will not help us counsel our clients. Please keep us updated as the rumor mill seems to have a live of its own.

Thanks for the info. Once the media got a hold of what was supposibly going on with Countrywide everyone began to shake. Please let us know what happeneds within the next few weeks.

To respond to__________ who was not man or women enough to leave their name.... It's not a matter of be able to handle the issues of a big company, it's why work for a company that has HIGHER RATES because they have to line their pockets all the way up the food chain, why work for a company that pays poorly on their commissions since their rates are so far out of line you make nothing to get deals, why work for a company that only cares about the company not their employees, I can blow away rates and make more money not working for one of the big companies and give my clients a better rate! It's simple.... let me know which of the larger lenders were able to give you 6.125% 7-10 days ago with no points paying back end .875%? I really don't think you would find one.....Not unless you brokered the deal to the wholesale side. Then working for a big company you compete with wholesale who gives better rates than retail! This is all for another blog but have the guts to sign your name if you want to post something negative!

Nima,

I work for a larger retail mortgage company that happens to be a competior of yours. I fielded 2 seperate calls from builder partners that I work with today about this very subject. Countrywide is going bankrupt and the sky is falling. I found myself defending your company and explaining that this fear/hysteria on a mass scale is part of the problem that is contributing to the current industry conditions. Please continue to share your information. Our results should be based on our sales skills and products not scare tactics.

AUG

2007

Nima,

Personally, I have a lot of thoughts on this subject matter and the way it has been handled by the Media and Real Estate Professionals in general. I will save that for another time. There are problems, no doubt, I'm glad you stepped up once again. There are 3 sides to this story....theirs, yours, and the truth. Time will tell the latter, time always does.

Thanks for the informative post. Always nice to get "the other side of the story".

Last month, CFC announced a 21% default rate on their sub primes and 5.4% on their Alt-As.

Unless CFC unveils a new, major source of funding, those default rates are toxic enugh to bring CFC down within 6 mos.

I'm sorry.

I do hope you remain solvent Nima, but it sounds like that your going to discontinue all wholesale operations, which to me means the "gentlemen side" of Countrywide will soon be dead. I've had run ins with your retail side of your company in the Utah region, and frankly these guy's in Utah play dirty pool.

Futhermore, one of the great things about Countrywide were your various array of products. The fact is that most of these will be GONE, and that makes you vulnerable to a US BANK or Bank of America taking away market share.

Again, this isn't a hate CWB post, but I just wonder if your do manage to keep your wholesale side if there is really anything better at CWB then US BANK? And if you do go retail only, it's going to be interesting to see if the shannigans that some of your retail managers in Utah have pulled will still be the rule instead of the exception. Personally if you do lose the wholesale then the retail will be geared to conservative business for the time being...No more FAST AND EASY for countrywide borrowers.

Nima,

First I want to say I admire you as a mortgage professional to take the time and courage to write this post. If any company has had more negative press in the lending business, we can all agree it has been your company. So for you to write, I think we all can take a step back of CW bashing and respect you as the professional you are.

As for CW, well your my competition and that is for the free market to decide.

Good Post.

Nima,

I wish you and your family well through this stressful time. It has to be very difficult to be in this situation, I wish you all the very best.

Laurie

Good post. How can you do a good job if you're only looking at the down possibilities and not looking at the up possibilities of things. Your post helps others think positive also and not be just gloom and doom. We need to know the facts then better decisions can be made.

I just wanted to wish you and everyone at Countrywide the best of luck in the coming weeks. As it sounds like one of the main problems is liquidity, I hope that new sources of funding become available soon. $11 billion dollars can be accounted for fairly quickly in terms of mortgage money.

Nima,

Please understand that I don't wish you or CW any ill will. I am no fan of CW through personal experience and I realize that IF they do fail it will have serious ramifications on our industry.

That being said the saying "he doth protest too much" comes to mind. You are probably just doing what you feel is right or CW has come down with these memos and instructed you to get the message out to the masses, but that doesn't necessarily mean that what they are telling you is the truth, the whole truth and nothing but the truth.

There are many things that are going on in the market place that seem to tell a different tale than the one you are putting out there. I don't personally know if CW will make it or not or how much of their business model will have to change, or not, but for anyone to claim to know what is going to happen is not being totally truthful.

So folks when you hear the company line from CW take it with a grain of salt, because you may or may not be hearing the truth, the whole truth and nothing but the truth.

Nima - Please don't take this as an attack on you, it is not. You are very highly regarded on this platform and one of your vendors (Peter), plus referral partners obviously hold you in high esteem. Yet you are taking CFC's public statements as gospel as your post is verbatim to the statement Angelo released to all Countrywide employees and the public. I have seen copies of very similar statements emailed out by AHM, HomeBanc and Charter this year (even within days of shutting down.

Yes, I agree the media can sensationalize a story and to a certain extent this has happenned with CFC. I truly don't believe the mortgage business is imploading. We are still making good loans today and will in the future. Did the industry go too far with a certain segment of the industry...yes it did. Is the media making too much of what is happening...I think so.

That said, it is foolhardy not to admit CFC is having major problems. Back in early April, Brian Brady told me he had analyzed the CFC financials and predicted they were going to be experiencing major problems over the next 12 months. He also predicted the Fed stepping in and increasing liquidity to mitigate CFC's cash crunch and brokering the sale of CFC to a financially stable banker/lender.

Whatever happens, CFC, will either be a much smaller company 12 months from now or more than likely acquired.

In the mean time, I highly suggest Realtors and brokers follow the advice given by Brian Brady in his recently featured post.

I do want to briefly touch on each of points Mozilo made in your post above.

"We have supplemented our existing liquidity options by infusing an additional $11.5 billion in to our operation through a syndicate of 40 of the world's largest banks. More than 70 percent of this facility has an existing term of greater than four years."

Why would a company need to suddenly borrow $11.5 billion in high cost loans to supplement their operation if they were on solid financial footing? They are borrowing high cost money to survive from many of the very lenders/banks they have competed against for years. Over $3 billion of the $11.5 is due in less than 12 months. The $2 billion pool they could not sell recently almost put them under. What will happen when the $3 billion comes due and payable in less than 12 months and their LOC's are tapped? Additionally the borrowing costs of the $11.5 billion exceed the projected ROI Countrywide will receive on the money. Additionally, with the $3 billion that will be due in 12 months or less, plus the $2 billion pool of unsold sub-prime loans, they will have over $5 billion plus interest coming due within the next year. With Moody's Investors Service downgrading Countrywide's senior debt rating to "Baa3" from "A3," their cost of borrowing commercially is substantially higher. While the open discount window and the extension of federal loans from 1-30 days will alleviate some pressure on CFC, the amount they can borrow from the DOT is limited by their asset base. Bottom line, according to most analyst, CFC has almost fully tapped their LOC's.

"We announced our strategy to fund a significant portion of loans through Countrywide Bank, which has approximately $100 billion in assets. Today, we fund approximately 70 percent of our loans through Countrywide Bank, and expect that nearly all of our loan volume will be funded through the bank by the end of September."

While Countrywide Bank has $100 billion in assets, that doesn't necessarily mean the assets are liquid (or valued correctly). How much of their assets are in MBS pools very similar to the recent $2 billion sub-prime pool they chose not to sell at a major discount. If Countrywide Bank had the financial strength being inferred by Angelo, why did Countrywide need to "syndicate" the $11.5 billion from other banks? Additionally. Countrywide Bank recently changed its Charter from a National Bank because it could not meet the reserve requirements mandated of Federally chartered banks. Thus they are in all practicality an S & L of days gone by. In a nutshell, even Countrywide bank is having liquidity problems. Countrywide Bank is no B of A, Chase, Wachovia, Wells nor even a Suntrust or Wamu.

"We expect that approximately 90 percent of the loans we originate will be eligible for funding through Countrywide Bank or the Government Sponsored Entities (Fannie Mae, Freddie Mac)."

Okay, that means Countrywide is effectively reducing their volume by approximately 50%. Additionally, the remaining 50% has historically been their least profitable product. The only profitable prime product left is govie loans. Do you think you are going to fund enough govie business to continue making a profit, much less service the additional debt just incurred, plus come up with another $5 billion? Countrywide Bank had trouble even meeting the reserve requirements of a federally chartered bank...where's the beef?

Additionally, most of CFC's volume comes through its wholesale and correspondent channel. With plans to curtail and some predict shut down (???), that would leave only the retail channel. Subsequently, CFC has never been the number one Retail lender in the country during a calendar year. On top of that. the speciality product that accounted for 50% of CFC volume has been curtailed or eliminated by the marketplace...that leaves just fannie, freddie and govies.

What will make Countrywide special and differentiate them from the crowd if all they can do is vanilla product?

"Just this week, we increased our product options for fully documented Jumbo loans."

There is NO market for JUMBO paper. There are no pricing screens to hypothicate. More importantly, CFC can not survive without a secondary market. With a cash strapped mortgage company and bank...where is the sustainability of a marketable Jumbo product? Again, what will make Countrywide different and how will they survive.

Brian has crunched numbers, the CFC assets only support a stock price of $5 to $7 a share...the financial fundamentals are not there for Countrywide. 99.99% of the AR members take no joy in what is happening to the families that will be impacted by CFC woes. Yes, Countrywide familes will be touched if CW goes into BK. If that happens, a good majority of the workforce will be absorbed by the remaining players. Yet, there will still be familes negatively affected. Brian spoke of the Stockdale Paradox.

"You must never confuse faith that you will prevail in the end - which you can never afford to lose - with the discipline to confront the most brutal facts of your current reality, whatever they might be."

Don't be one of the blind optimists Admiral Stockdale admonishes. It is commendable the loyalty you exhibit towards CW, however you have your family to think of first and foremost...Mozilo I'm sure has taken care of his. Look at the situation objectively. You will thrive at any organization lucky enough to have you on their team.

You are a mortgage man and mortgage people if anything are very adapt at adapting (is that a double negative?). Remember it is you and not CW that makes you "The Mortgage Man."

Even if CFC flounders (only time will tell), the remaining strong players will pick-up the slack.

Again Nima...you will be fine. I wish you and the many families at CFC only the best.

I new this was just a rumor - I hoped it was just a rumor - I prayed it was just a rumor

we had too many lenders..... and too many account execs.....

too many loan officers too....

Looks like Countrywide Execs should come to Active Rain if they want to see industry/consumer confidence in their company :(

Nima, personally, I love working with Countrywide...On the wholesale side...I can't speak for the retail side.

I love putting my business through Countrywide...but, my dad has been in this business for over 35 years and he gave me a good piece of advice as a Mortgage Broker...DON"T PUT ALL OF YOUR EGGS IN ONE BASKET!!!

I'm now understanding why and protecting my business by backing off a percentage of our business to other powerhouses...just in case the sky falls on CWBC.

In a free market, it's the survival of the fittest and if CWBC isn't around anymore...someone else will be there to pick up the pieces.

I certainly hope CWBC's Wholesale Operations stick around, but by the same token...I'll adapt.

My best to your and your family. You are a professional at what you do. Keep your composure and remain that way.

Scott

Nothing like reading a somewhat fiesty post on a saturday afternoon! :)

Nima, We recently read some nice things about you on something Brian did. You spoke well in the that comment trail as well. It was appreciated. So is your post here, and is how you handled the anonymous comment. Classy all the way.

We don't normally see a lot of Countrywide loans here at the Lake, though we have had a few recently. Naturally all of us everywhere though seriously hope that you do surpass the current storm. (Hopefully the Fed will not fall asleep like Homeland Security did with Katrina... they didn't yesterday.) If not, the affect on us all would certainly be challenging.

Best to you Sir, and Godspeed through it.

Good post. I haven't thought it through very well, but my gut feeling is that CW retail shops will shrink or go away in the near future.

Nima, just closed one with Countrywide yesterday. With all the negative publicity lately, it was a bit stressful but came out just fine!

First of all, Nima, I'm glad this was featured- you deserve equal time.

Secondly, I, in no way want CFC to go down. In fact, I called for a federal bailout of CFC before I wrote my article here on Active Rain- I was heavily criticized for that stance.

The open discount window and its extension of federal loans from 1-30 days will alleviate some pressure CFC has on its short-term borrowing costs; instead of paying 12% to fund loans through its commercial paper operations, CFC can now borrow money directly from the Treasury for 30 days at below 6%. Owning the federal bank will help them.

CFC must change. Mr. Mozilo, as admiring of him as I am, must go; he was the poster boy for the crazy lending we've done these past 4 years. If CFC uses their federal bank as their primary funding mechanism, they need to focus on guvvies and agency paper. Anything more would be grossly irresponsible and reminiscent of the S&L binge in the 80s.

No matter what happens, the "Mortgage Man" will be in business next year, regardless of the logo on his business card.

Fluff always comes from the inside to make employees feel secure in their jobs. It is my belief that Countrywide like many other lenders who are not bank backed will have a tough time making it threw the market. Mortgage brokers as they know their job know will be non-existence. There will still be mortgage brokers out there but the capacity in which the do business will have to change in order for the market to work itself out and avoid these problems in the future.

It is too bad that Countrywide has to explain itself because of what some stupid no-nothing media people started spouting on TV, the newspapers and on the internet.

Unfortunately, we live in a world where people "enjoy" it when the Kings are challenged or befallen and that is the case with Countrywide.

Countrywide will survive this. They are the nation's top lender and one in 5 people make their mortgage coupon to them.

Does anyone for one second not think that the Fed's $50B+ capital infusion in the past two weeks was not sparked, in part, by the situation at Countrywide?

How about the half point rate cut? You don't think that was influenced by Countrywide news?

Countrywide loans make up over one-third of the business insured by Fannie Mae.

This administration has said time and again they won't step into this crisis but its obvious they draw the line at Countrywide.

And, not to get too political, whether you like it or not, the 2008 administration, especially if it's lead by a Democrat, will intercede. They have also made that pretty clear.

Countrywide is in financial difficulty. All of the players in mortgages are with the exception of the banks like Wells, B of A, Chase, WAMU etc. The reason....cash. Banks have cash. Countrywide's banking side is much smaller but that's the key to future success so they will move that way.

Countrywide will certainly change their business model and guidleines as everyone that sells mortgages will and has, including the banks. Countrywide is no different.

At the end of the day, we will be left with X amount of safer loan products and I can assure you that Countrywide will be competitive with them all.

And, sure, at some point, they may have to file for a Chapter 11 BK to keep going but so what? Many of the airlines have done that for years and have successfully operated.

I love the guys that get on this site and others and bash Countrywide and Angelo Mozilo, its CEO. You make your living, in part, because of the roads that Angelo and his partner paved by creating Countrywide as a nationwide mortgage banking firm.

And if you have even made a decent living in the business its, in part, because Countywide or one of its resellers helped you close a transaction.

We should be rallying behind Countrywide and what they represent in our business not thirsting for its fall.

Great work, Nima!

Aaron

Why cant people talk intelligently about the possibility of CFC failing, why must things only be rah-rah cheerleading and positive happy thought? Looking at things in a realistic fashion gives people the proper perspective to deal with the situation. If "negative" talk makes you uncomfortable isn't that really an issue for you not having the flexibility of mind to consider the possibility?

CFC is in a tough spot and neither you or I know if they will pull through, but its a very real possibility that they could go under but that possibility is not the most likely scenario, only one people must consider.

Load up Mr Daniels since 70,000 shares are now available courtesy of Countrywide Financial Chairman and Chief Executive Angelo R. Mozilo.

Also with there new credit rating they wont be getting to many more loans.

All of Countrywide ratings are "CreditWatch negative," meaning there is the possibility of further downgrades.

Interesting to hear the party line (most was previously reported online) - congratulations on your loyalty to your employer (seriously). Very similar to my experiences with GMACM. Time will tell.

Thank you for putting the form letter/email here. I have already received my form letter from another source.

I got the same form letter too from one a loan officer from Countrywide verbatim. Is this something that all agents are sending out to all of their client base?

Thanks, Matt

All eyes on countrywide right now! I have been thinking about you Nima!

Wow, I have to say the comments in this post are the meat and heart of this discussion. I'm very impressed with the level-headed analysis of both Brian Brady and Tony Gallegos. Have to agree with their points which seem very reasonable and not at all mean spirited.

Everyone seems to admire Nima as a professional.

Most reasonable people do not wish for Countrywide to fail, however in light of what is happening in this market, things are not as rosey as the excecs at Countrywide are trying to make them out to be.

I was discussing this exact topic with some agents in my office the other day. I really hope that Countrywide doesn't fail but, I'll have to wait and see. I will be printing this and putting it up in the office on Monday. Thanks Nima!

This is sad. Countrywide management messed up really, really bad. People are in foreclosure because of the type of loans that Countrywide talked people into. They screwed over a lot of families and now their screwing over their own employees. Hundreds or even thousand of their employees will soon get layed off. All they ever cared about was volume; nothing else.

AUG

2007

Jay, interesting that you are so quick to point the finger at Countrywide...Wells Fargo has an incredible amount of Foreclosures here in Sacramento. They too, put people in horrible loans where they are now loosing their homes. They worked side-by-side with a new homebuilder JTS and that subdivision was on the news as the WORST in ALL of CA for foreclosures...who did the loans?????? Wellls Fargo!

Shhhhhhh, did someone say Wells Fargo?

Gena - It seems as you have and emotional tie to Countrywide and the news of their difficulties is particularly distressing?

Yes, Im sure Wells Fargo, B of A, WAMU each have pockets or neighborhoods in which their foreclosure rates is high (that is true with all large national lenders). Reason - They were probably the preferred lender on that particular subdivision. However the facts are that Countrywide has a substantially higher overall foreclosure rate than Wells. Both regulators and Bond rating agencies have independently stated the underwriting and risk controls have been superior to those of Countrywide. Wells chose not to provide neg-am loans to their customer and even their sub-prime loan pools have the lowest default rates in the industry. That is one of the major reasons why regulators, industry analysts, the media and others are so high on Wells Fargo. In addition, Wells is on solid financial ground and has been the number one retail mortgage lender in the nation for 15 straight years.

Every major lender had something to do with the situation that is happening today it's not just CW or WF or WAMU or BofA it is a combination of them all. CW catches most of the heat when comparing to the biggies of the industry because they are the biggest. Kind of like the heat that Mortgage Brokers are catching. Since Brokers originated somewhere around 65% of the loans wouldn't it make sense that most of the problems originated with brokers?

I am a broker so I am likely more sensitive to this, but if you listen to the media pundits, the Presidential Candidates and just about everybody talking about the problems it all comes back to brokers. Now some are saying its all CW, come on you can't have it both ways is it the Brokers or the Big Companies? Could it be that the problems were caused by all sectors of the industry?

This is also why I think that if anything is going to be done to help curb this kind of crap then it needs to go across ALL originators not just brokers or originators that aren't part of Federally Chartered Banks.

I spoke with an originator with WAMU- a federally chartered bank- that told me her boss and his boss told them it was okay to do stated W-2 Option ARMs on all their clients even if they had to inflate the income to make the deal work. She was told the bank knows that this is happening and they are taking that into account when they price the loans. I told her it was fraud and she said no its not because her boss and his boss told her it wasn't. I wish I had that much power. My point is the problems were across the board not just in one company or with brokers only.

Hell I guess I am guilty because I didn't dig further into deals with other lenders that looked fishy, had inflated appraisals and the like. Is it my fault to because I didn't turn them in? Should I have called the Feds about the girl at WAMU? I don't know the answer to that question, but I do think that those companies and those originators that really pushed these types of fraudulent loans will get theirs in the end. It's just too bad the good companies may get caught in the crossfire.

Haha ...what a bunch of hipocrites...

Most of you are the most ridiculous cheerleaders for the market...Oh yeah, RE never goes down, etc...

The world will be a better place when half of active rain is gone, and the longterm folks are left!

If you believe in CW ...buy it...

Me, I have made a bundle shorting the stock, the home builders, etc...

ARM resets just starting...sellers reluctant to drop prices, can't buy if you can't sell...

I see a lot of H2's and BMWs being sold on the cheap these days.

...Looking forward to buying a nice new car from a former CW agent in the next 6 months!

<b>karen<b>,

You are commenting on topic you know little about..you realize that a BIG reason why Countrywide has so many more foreclosures is because they purchase loans from OTHER lenders. That's right they are not the biggest originator of loans they are the biggest SERVICER of loans. What does that matter? Because it was not necessarily their loan officer or wholesale department selling the loan. They purchase portfolios of loans and then service them. I really can't stand when people are so narrow minded about something so complex.

Nima,

Countrywide is the leader in the mortgage industry. They are also the biggest donater to lobby's to stop regulation in the industry. I heard a rumor that they might go to offerangel.com to build consumer confidence and retain their payoffs and attempt to self regulate without being forced into new laws. Is this true??? It was going throught the grapevine in my office. Joy, Prudential, CA

Joy - I think it is fairly well documented and known Countrywide acquired much of their volume from both Correspondent lending (that's when they purchase loans from OTHER lenders) and Wholesale lending channels. Nevertheless, they established the loan perameters and programs in which they purchased these loans. Approximately, 50% of their volume came from Option-ARM, sub-prime and Alt-A product that has disinegrated and where their troubles are stemming. To quote Brian Brady above:

"he (Mozilo) was the poster boy for the crazy lending we've done these past 4 years"

Yes, Countrywide has been the number one lender when you combine their correspondent, wholesale and retail volume, however, how much of it was done with loans that were frought with fraud or approved and funded irresponsibly? While Wells, was the number two lender through all three channels, they have been the number one retail lender fifteen years running. Other strong lenders like Chase, B of A and Wells CHOSE not to purchase the volume Countrywide acquired through correspondent channels for exactly the reason you stated. All the lenders mentioned above where in position to do so, however because of the potential (and now real) risks, they wisely passed. Long story short, any bigh lender can go out and buy the market...history is frought with company's that did so. It however does not always prove to be the prudent thing to do.

There is a difference between foreclosure rate and number of foreclosures. And Countrywide's rate in both exceeds that of Citi, Wells, Chase and B of A when their correspndent and wholesale servicing portfolio's are stacked ranked.

Because Countrywide is the biggest contributer to lobby's fighting regulation in the industry doesn't make them angels. Darn, Big Tobacco is one of the nations biggest lobby's.

Because someone says something you don't like doesn't mean you are right...that to me that is narrow minded.

Wells Fargo is the biggest servicer my friend ;)

Why would countrywide invest in bad loans?

"That's right they are not the biggest originator of loans they are the biggest SERVICER of loans. What does that matter? Because it was not necessarily their loan officer or wholesale department selling the loan. They purchase portfolios of loans and then service them."

In a couple of months, Wells Fargo, BOFA, Wachovia, Chase and Citi will be the only lenders standing tall. Even credit unions will be doing a lot better than Countrywide ;)

Joy:"You are commenting on topic you know little about..you realize that a BIG reason why Countrywide has so many more foreclosures is because they purchase loans from OTHER lenders. That's right they are not the biggest originator of loans they are the biggest SERVICER of loans. What does that matter? Because it was not necessarily their loan officer or wholesale department selling the loan. They purchase portfolios of loans and then service them. I really can't stand when people are so narrow minded about something so complex. "

Before talking down to people for commenting on something they know nothing about you might want to actually know something about the topic. Owning the servicing rights for the loan (as CFC does for $1.4 trillion of loans) is not the same as owning the loan, they are getting paid to SERVICE the loan (collect payments, manage non-performing assets). The actually portfolio of loans that CFC holds for investment is currently $74 billion as of Q2 of 2007.

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Ranked 41st in revenue among all companies in all industries

World's 19th most profitable company

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Any company can go under at any time. That possibility exisits for all of us, not just Countrywide. It's just their turn to get the negative attention

hmnn. This seems to be an attack on Countrywide. What gets me is how everyone blames the media for all the negative publicity on Real Estate and yet here we have mortgage Lenders on the band wagon against Countrywide. Well, I'll be the first to say that I hope all of you stay in business and not harm the economy any further! A little postiveness goes along way...

AUG

2007

Thanks for the update. Countrywide wholesale is a favorite because of the great communication your underwriters in Arizona have with their customers. Account Exec Nathan Baker is tops, too! I've subscribed to your blog and made you an associate. See you (metaphorically) soon!

Mike in Tucson

THIS BLOG: I am willing to speak with you on the phone or by email if you have any questions/concerns as I do not want to post any comments towards any of your comments. Thank you all for visiting this blog and for commenting as well.

NEW BLOG: Mortgage Man's Top 10 SIGNS WE ARE IN A NEW MARKET

AUG

2007

Excellent BLOG Reply to the comments of this BLOG! Click here to read Aaron Gordon's Blog (highly recommended): Man, Am I Tired of The Countrywide Bashing and Rest of the Media Garbage!!!

AUG

2007

Countrywide's Lending Practices on Subprime Loans

On Sunday, August 26, 2007, the New York Times ran an article on the front page of the business section

challenging certain business practices of Countrywide Financial Corporation, and particularly its subprime

operation. This article contained numerous inaccuracies and "facts" taken out of context to place

Countrywide in the worst possible light.

Countrywide chose not to respond to this article because we felt that most readers would have the

reaction to the article that Thomas Brown of Bankstocks.com had when he wrote his piece entitled,

"Everything but Evidence." In addition, Countrywide has been working diligently to ensure that we

continue delivering value to the American people as we have been doing for the past almost 40 years. As

some of our constituencies have assumed that the article is true in all respects, this rebuttal is intended to

set the record straight.

Additionally, we have reached out to Senator Schumer to reassure him that Countrywide's business

practices were not accurately portrayed in the New York Times article. For example:

• Countrywide's business processes are designed to prohibit steering borrowers who qualify for

prime loans into subprime loans. In fact, the majority of consumers who come through

Countrywide's retail subprime channel receive a prime loan.

• Second, Countrywide's loan officers do not receive higher commissions for subprime loans with

prepayment penalties.

• Third, Countrywide prides itself on the extraordinary efforts we are undertaking to assist

borrowers who are experiencing difficulty making their loan payments, and in fact we have found

solutions to keep more than 35,000 borrowers out of foreclosure during this year alone. The

company has a team of 2,500 employees in its Home Retention Division dedicated full-time to

these efforts.

Countrywide's mission is to deliver and help preserve homeownership for Americans who have the desire

and financial ability to own a home. Countrywide's business model is based upon acting responsibly in all

of its lending practices. Countrywide does not tolerate steering of borrowers into loans they cannot afford,

and the company categorically rejects any assertion to the contrary. In fact, Countrywide has done more

than any other lender to ensure that borrowers receive the appropriate loan options.

Countrywide has become the nation's leading mortgage lender by acting in the interests of our

customers. The company has made loans to 25 million families throughout our 40 year history and has

become a leader by delivering value to our borrowers.

Subprime Originations Processes

Borrowers who come to Countrywide through our retail subprime channel go through our automated

underwriting systems, which are designed to determine whether a borrower could qualify for a prime loan.

If they do qualify for a prime loan, then they are provided with that option along with others. Ultimately, it

is the borrower's choice as to what loan meets his or her needs, based upon their individual financial

situation. In fact, the majority of consumers who come through Countrywide's retail subprime channel

receive a prime loan. Countrywide provides full and comprehensive disclosures to all borrowers.

In 2006, subprime loans comprised only approximately 9% of Countrywide's entire loan originations. For

the month of July 2007, this percentage has decreased to less than 5%.

Countrywide has been committed to serving borrowers who are unable to qualify for a prime product,

either due to past or current credit problems, financial situation or because the borrower cannot or

chooses not to meet prime market guidelines. Our objective is to understand the financial needs of our

borrowers and to offer them the best product choices for their individual situations.

Countrywide's systems, scripting, training, policies and procedures focus on providing loan options that

meet a borrower's individual objectives. We are committed to supporting every effort to help borrowers

make informed credit decisions and understand the options available to them. A proprietary financial

benefits worksheet is used with every subprime borrower to determine the benefit of the loan products

offered. We make loans that provide a financial benefit to the borrower.

Underwriting Standards

Countrywide adheres to underwriting standards that require that no loan will be made unless we have a

reasonable expectation that the borrower has the capacity to repay the loan. Loans are not made based

solely on the equity available in the property.

Underwriting Controls

Countrywide has controls throughout the process to ensure compliance with our policies. An automated

underwriting system is used at the point of sale to determine possible loan options available for the

customer based on the information provided during the application process. Countrywide then reviews

the loan application, credit report, estimated property value, loan program and pricing to ensure that the

loan being originated meets the borrower's needs. Once this is complete, the loan application, financial

benefits worksheet and verification information is submitted to centralized Underwriting, Document

Preparation and Funding Departments.

Countrywide has established disposable income guidance as part of the overall analysis in determining

the borrower's ability to repay the loan. Use of such guidelines is a fairly standard practice in subprime

lending. It is also standard practice for VA lending. The dollar amounts used for Countrywide's guidance

generally track the amounts recommended by the VA for their loans.

Post-funding audits are conducted to assess adherence to our standards. Employees are encouraged to

report any wrongdoing to an anonymous, externally managed Ethics Hotline. In those cases when

policies have not been followed, the company will, as appropriate, make refunds to impacted borrowers or

modify the terms of the loan. Moreover, employees who do not follow policy are subject to immediate

disciplinary action up to and including the termination of employment.

2/28s and 3/27s Hybrid ARMs

Historically, the most popular subprime products were what the industry calls hybrid "2/28s" and "3/27s."

Based upon changes in the secondary markets, the vast majority of these loan programs have been

eliminated. These products have a low initial rate for two or three years and thereafter adjust to a higher

rate. The premise behind these loans is that subprime borrowers have two or three years to improve their

credit in order to then qualify for a prime loan. Our experience with hybrid ARMs was that they provided a

valuable tool for customers to overcome temporary financial setbacks and in the past few years to be able

to afford a first home. From 2000 through 2005, for Countrywide customers who refinanced their hybrid

ARM with Countrywide, almost 50% received a prime loan. In addition, many borrowers received fixed

rate loans, both prime and subprime.

Prepayment Penalties

Subprime borrowers are informed about the options between loans with prepayment penalties and those

without. When opting for a loan with a prepayment penalty, the borrower receives a benefit such as a

lower rate or lower points, and the terms of the prepayment penalty are fully disclosed to the borrower.

Our Account Executives do not receive additional compensation for subprime loans with prepayment

penalties.

Lead Generation

As with any sales organization, lead generation comes from a number of sources including our retail loan

origination division, advertising, word of mouth, direct mail and our loan servicing portfolio. Regardless of

the channel through which the borrower was referred, Countrywide follows the same protocol to ensure

that our subprime borrowers receive a benefit from their loans.

Account Executive Compensation

Originating a subprime loan is more time intensive than a prime loan and, therefore, Account Executives

are compensated for the extra time, effort and resources needed to fund a subprime loan. Our Account

Executives are not rewarded by the features of the loan product they originate (i.e. an adjustable rate vs.

a fixed rate loan) or whether there is a prepayment penalty.

Fee Disclosure

All points and fees are fully disclosed to our borrowers. Within three days of receiving an application,

Countrywide provides borrowers with a Good Faith Estimate of all points, fees and charges that may be

incurred for the particular transaction, including third party charges. In addition, at the closing and before

signing, the borrower receives an additional disclosure of all fees and charges associated with the loan.

Loan Related Fees

LandSafe is an affiliate of Countrywide that provides appraisals and closing related services. LandSafe

was created to provide our customers high-quality, competitively priced, service focused closing services.

LandSafe and Countrywide Tax Service Company regularly obtain market pricing surveys to ensure that

their fees reflect the costs of services provided and are competitive in the marketplace.

Mortgage Brokers

Countrywide's Wholesale Lending Division does not control the price that mortgage brokers charge

consumers. Before a mortgage broker submits an application to a lender, the broker works with the

consumer to determine the best loan options. Our mortgage broker web site helps the broker make a

determination as to the possible loan options available to the customer based on the information provided

to the broker during the application process. The final pricing is determined in negotiations between the

broker and the consumer. At that point, the information is submitted to our wholesale subprime unit.

Profit margins on subprime loans are in line with prime loans.

The secondary market prices loans with prepayment penalties more favorably than loans without this

feature. Loans with prepayment penalties are less likely to pay off during the prepayment period,

providing investors with more of a guarantee on their return. This more favorable pricing is made

available to the broker, who is encouraged to discuss this feature with the borrower as part of the

discussion on total compensation. We make available to borrowers who come to us through brokers a

brochure that describes the various elements of broker compensation, including yield spread premiums

and prepayment penalties.

Conclusion

Countrywide is proud of the work we have done over nearly 40 years by helping millions of American

families achieve the dream of homeownership. We categorically reject recent criticisms that have been

leveled against the company based upon false facts and mischaracterizations of our lending practices.

Our tens of thousands of employees strive every day to deliver outstanding value to our customers and

business partners, and we will not waver from our mission of homeownership.

_______________________________________________________________________________

Nima Rezvan

Home Loan Consultant

Countrywide Home Loans

203.913.6016

http://www.MyNima.com

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