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Man, Am I Tired of The Countrywide Bashing and Rest of the Media Garbage!!!

Please excuse me while I rant.

I just got done reading the comments on Nima Rezvan's post Countrywide Home Loans: The Real Story (Informative Blog). I have had enough!!

Unfortunately, we live in a world where people "enjoy" it when the "kings" are challenged or befallen.

We love reading about Paris' prison sentence and Lindsay's drunkenness and the daily challenges of being Brangelina. Somehow their problems make us feel better about ourselves.

And now that is the case with Countrywide. And I am really fed up with it!

The bottom line is....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 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, whether its the right move 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 to fund their operations. They don't need to rely on the credit markets, where confidence is at an all-time low, to run their business.

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 guidelines just as everyone that sells mortgages will and has, including the banks. Countrywide is no different.

Why are we pointing the finger at them? EVERY SINGLE LENDER, BANK OR NOT, IN THIS BUSINESS, HAS CHANGED GUIDELINES DRAMATICALLY IN THE LAST FEW WEEKS.

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.

So they took a draw of $11.5 billion of loan committments that was already made available to them long before? They have another $170 billion to go if they want it. Its there are waiting for them to keep them going.

It's obvious that this isnt the best sign but its certainly a whole lot better than the options presented to American Home Mortgage, First Magnus, and the laundry list of others who faced the same challenge and couldn't respond.

And, sure, at some point, Countrywide may have to file for a Chapter 11 BK to keep going, but so what? Many of the airlines and other titans of industry have done that for years and have successfully continued to operate.

I love the guys that get on this site and others and bash Countrywide and Angelo Mozilo, its CEO.

Quit being jealous because the guy became a billionaire through nearly 40 years of hard work.

You make your living, in part, because of the roads that Angelo, and his partner David Loeb, paved by creating Countrywide as a nationwide mortgage banking giant from a small two-man financial services office in New York.

We should be rooting and cheering for American success stories like this because it reaffirms the American dream. The dream that you likely still have and you want your kids to have.

If you have even made a decent living in this business its, in part, because Countywide or one of its many resellers helped you close a transaction. They are still helping you make your living today.

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

Posted by Aaron Gordon, Home Loan Consultant, Las Vegas, NV on 08/18/2007 02:45 PM

Comments (39)

countrywide bank, countrywide mortgage

39 Comments on Man, Am I Tired of The Countrywide Bashing and Rest of the Media Garbage!!!

AUG

2007

I agree, Aaron. My 'ex' ABC rep called in yesterday and said he was thrilled with the opportunity before him. NOW, he gets to consider who he should work for and, when the choice is right, he'll be with a company which survived this fallout. Good attitude - good for him.

Bashing successful people has always been a favoured pastime of the chattering masses. Look at the time and care it takes to build something. Now, contrast that with the complete lack of anything worthwhile to pull it down.

I suggested something as a thought-provoking article but I see no-one wants to comment. http://activerain.com/blogsview/176260/What-SHOULD-be-done

Thanks for taking a hard look at the current media frenzy. What we really need is to find out what Paris, Brittany and Lindsay think of the current mortgage, sub-prime market. In between chewing gum, and popping it, interjected with as many misuses of the word "like" as possible, and claims that all things are "hot", we're sure their opinions on the subject would make for great news.

In the face of Hurricane Dean, we're also hoping that Michael Jackson will take over the helm at Homeland Security. But that might be too much to ask for.

The media has made a big deal of CW because they are a giant. Small companies in the headlines would not make news, so they go for the big guys. Right now I'm just making sure all my deals have a back up plan.

I agree, I just stay focused on the positive. Helping my clients

Andrew, you should interview as one of their national spokesmen! Man, I almost felt like I was on a sports forum or something.

As for Countrywide, I was one of those who have commented on Nima's blog. I'm not their biggest fan, but I don't wan to see them go out of business either. The reality is that there will be changes at Countrywide, and one I know they've discussed is getting rid of their wholesale business. Which I may ad has been one I've enjoyed working with in my practice.

I personally have had problems with their retail branches in the Salt Lake area, and they have pulled off shannigans that other mortgage companies would never try because of the loss of revenue and danger they put their clients in.

When I have a countrywide retail guy offering to pay off one of their wholesale customers prepay's by offering a jacked up interest rate short term 3/1 ARM (paying 5 YSP's) which NO broker could ever recieve, then refinancing the same client 3 weeks later into the rate we were offering the same guy right off the bat, makes you scratch your head and say....What the HECK!!!....This is a major NO NO in the industry and the impression I recieved from the wholesale manager is it happened all the time.

Another dirty trick retail guy's have employed is to wait until the mortgage broker orders the payoff of one of their clients, and even if countrywide wholesale is attempting to underwrite the loan, they will then try and steal it away from that broker. So pardon my total lack of sympathy for the bar room tatics that Countrywide has employed through the years.

Is Mozillo a great guy, who the heck knows, you really don't either. The reason most of us do not want to see Countrywide crash and burn is for one obvious reason. If they go down it would be akin to Microsoft going bankrupt in the computer world. Though I'm sure Novell, Linux users and a host of others would secretly cheer, the fact is that if Microsoft went under then we'd all be in some major sushi!

But if Countrywide was to go out of business, I would particularly feel bad for the employees that would lose their jobs. Mozillo if you haven't followed the news has pulled out hundreds of millions of dollars from his company, so I'm sure he'd survive any bankruptcy.

The media rode the real estate boom and in some ways helped create it, now they are going to ride it all the way into the ground. Just like there are to many realtors, there are way too many reporters.

THANK YOU THANK YOU THANK YOU THANK YOU THANK YOU THANK YOU THANK YOU THANK YOU THANK YOU!

I'm glad someone finally said it - I've WAY over this whole thing. It blows my mind that Countrywide taps $11.5 billion of their available funds ($186 billion) and all of a sudden, they're done.

No way - not gonna happen. Countrywide will be one of the last lenders standing, along with the other major banks (Chase, WAMU, BOA, etc). The "pass-through" conduits will continue to fall.

Alan--- I agree with you and that ABC rep does have a great attitude and I am sure he will find success at the next company he goes to.

Richard--- Too funny!! I am surprised you didnt see this from "US Weekly- Real Estate edition":

Lindsay Lohan on the mortgage crisis: "Like, my uncle's brother has a subprimer loan thing and he was always, like, a loser when I kid and a few years ago he got one of those subprimy loans 'cause he has really bad credit, you know, and this whole submarine mortgage thing is like a really bad thing and stuff. Like I just really hope that President Bush does something for these poor underprivledged people, you know, because if your payment gets too high its too high for you to pay and being a homeless person would really suck. Keep it green."

Karl--- You are right about the Microsoft comparison.

It sounds as if you have had some bad experiences with them. However, in every giant company there are going to be bad seeds. I am sure Countrywide has their share of bad loan officers and bad managers.

I have sold hundreds of loans to them, and gone up against the retail branches in competition, hundreds times more, and I have never had an experience like yours.

Sure, they are tough competitors and I have lost to them before but I have never seen the situations you discuss. I am sure it happens but the point is that I am not confident that is rampant and I would be very surprised if it were company policy.

Yes, I know how much stock Angelo Mozilo has sold this year. But it doesnt matter. That's his right. I am not sure if he is a great guy or not. To me, its irrelevent.

Angelo Mozilo built Countrywide from a two-man office in NY to the biggest mortgage company in the world. He is not some hired-hand CEO who comes into an established company reaps millions and then bails.

He is an employee of Countrywide, which is a public traded company, as well it's founder and a major shareholder. He has every legal right to buy and sell as much stock as he wants per SEC regulations.

There is no doubt he would personally survive a corporate bankruptcy. Regardless what happens he has achieved financial greatness and his family is covered for generations to come. But if you built a company from the ground floor to one of the biggest in the world, I am sure the money would be second to your desire to keep it there.

Missy-- Thats smart. A client just sent me over a new contract this morning and it requires two pre-approvals from two mortgage companies and one has to be a back. Pretty smart listing agent.

Sky-- That's the way!

Michael--- And too many loan officers. :)

Gareth--- AGREED! Maybe its because we have to deal with it everyday, but I have really had enough of this. We've been given a new set of rules to play by, let's play the gane and stop worrying about the rule changes. By the way, you are correct. The conduit business as we have known it is changed.

We just did a post on our outside blog based on our comment to you earlier today. We link to you on it, and to Brian and Nima. Here's the link to it, and we hope you don't mind. See what you started? We've been laughing all day. It'll appear on AR on Monday. Lets see if anybody reads it.

the media is nuts, and extremely irresponsible.

cw, not one of my favorite enders, will march on.

i hope the government stays out. let the markets cure themselves.

Richard--- I love it!! Cant wait to see it on AR Monday.

Jay--- Once again, I think the government stays out until 2008. Its the fundamental difference between Dems and Reps. One believes in more government, one less.

I got sick of it weeks ago and just turned the TV off. The media is in it for ratings. Whatever gets the attention and causes the most kaos. If the media hadn't perpetuated this entire situation by constantly beating it into our heads that the sky is falling, things might not have gotten so bad. I lost interest a long time ago. Thanks for sharing your perspective on it.

Donna--- I am sick of it t oo but I can't seem to turn it off!!

AUG

2007

Not quite accurate, tho. Countrywide does have a bank, and the mortgage company and bank have been in the process of merging for months, with completion scheduled for late Spetember. WaMu, Wells Fargo, et al. are in a similar boat. The bank-backed lenders will survive, but what we are facing is a loss of "low end" buyers - due to very few affordable homes here. And conversely, loss of high end sales due to rising rates for nonconforming properties (mortgages over $625,500).

Two federal events are hoped for - a rise in the conforming loan limits and a reduction in the prime rate. The former will help sales, and the later will help those who already have adjustable mortgages and home equity lines.

Vanessa- you bring an interesting perspective about home sales but really this rant was more about the rumors of Countrywides demise. They are still doing 30 billion in loans monthly so I don't think slow sales are their biggest challenge today. I think if you read my blog again you will see I mention Countrywides banking side and their movement in that direction. Also the conforming loan limit is $417000,not $625500. However you are right that there is a movement to increase the FHA loan limit to 417K to mirror this.

Vanessa-- please allow me to apologize. I just noticed you are in Hawaii. And your conforming limits are much higher. Your market is very unique and much more expensive in most areas of the islands. That also makes for a unique perspective about the overall real estate market and the lending crisis. Thanks for your post.

Good post but it still doesn't hold well for CW when as an REO Broker I have quadrupled my business in the last 6 months and everyday I am doing more and more work as CW has a potential default rate of 27% over the coming quarter.

See a TV reporter doesn't see this but it is out there and when the Octber ARM adjustments come through there will be more whailing in the halls of of many lenders.

Paul-- I have seen a lot of data out there but I have never seen anything that suggests a potential 27% default rate. Please send me that link or where you saw that. I would be very interested in seeing it. If the defaults are even remotely close to that, forget Countrywide, we could be looking at economicruin. The scariest stat I have seen is that 14% of all loans made in 2006 were subprime loans and 75% of those will adjust next year. I know the data about the ARMs adjusting at the end this year but based on the ones that have already adjusted this year, although they have kept many REO specialists like yourself extremely busy,we haven't yet seen anything close to even double digit default rates. Thanks for the post!

Thank you very much for sharing, some of the comments were interesting as well.

AUG

2007

Thanks, Shane!

Good post...but the reality of the situation is that you don't "know" Countrywide will survive any more than others "know" Countrywide will go under. Bad things happen...even to kings and the super-duper wealthy and powerful. I'd bet you're right. Countrywide probably won't go under. But nobody "knows" what tomorrow really holds or where the next hurricane will hit (figurately or literally).

AUG

2007

Aaron Gordon: Can I just tell you how lucky we are all to have you as a member of this online real estate professional community. I am upset that I read this blog so late but better late than never. I agree with every single point you made here. As you read in my blog, I did not want to comment and reading your blog made me feel better. I hope as many A/R members see this as possible. I have rated this blog a 5 and I have flagged it so that it can be featured. Mr. Gordon knows what he is talking about. Thanks Aaron

Aaron Gordon, thanks for the mention by the way, appreciate it.

Thanks, Nima! I see a lot of the naysayers have disappeared with the news today that Warren Buffett is interested in Countrywide. Makes them re-think the possibilities vs. the negativities. Hang in there!! At the end of the day, there will only be a few left but you guys will be one of them.

Same rumor hit Hovnanian last month, good exit point for institutions. The WSJ journal report was pure speculation based on some guys opinion of what he thought Warren Buffett should do and people run with it as fact. Happens all the time, it's never right.

Mikey--- Chances are, you are right. However, Buffett telling CNBC "that the worsening credit and housing markets may present some real investment opportunities," is much better news than what we had last week.

AUG

2007

Aaron, Countrywide will survive even if in name only! The earning power of the name Countrywide is huge. If the company loses enough value there will be some Company or Conglomeration that will be waiting to scoop it up! For instance, the name "World Series of Poker" was the only thing of value that Binions had left, Harrahs bought the name!

Aaron, I also agree with you about the media frenzy! They are like a pack of hyenas waiting for the next bad news to surface!

Rey--- Excellent points. I am so sick of the news I have refused to read any of the stories about this week's closings.

Aaron, agreed! Although I have been reading the articles I have really tried to focus my posts on the positive things in our industry!

AUG

2007

Rey---Its the only way today!!

SEP

2007

http://www.indystar.com/apps/pbcs.dll/article?AID=/20070908/BUSINESS/709080430/1003/BUSINESS

Craig--- In the same article, "More than 15,000 jobs have been eliminated this week alone as IndyMac Bancorp, National City Corp. and Lehman Brothers Holdings also announced reductions." Its industry wide.

SEP

2007

I used to think Countrywide would survive as well. In fact I wrote about it when everyone else was crying Bankruptcy:

But after the recent news about Countrywide layoffs totaling a minimum of 12,000 employees, my tune has definitely changed. I see them being bought out by Bank of America...I just can't see the company surviving given the amount of bad loans they've made over the last several years.

Just don't think they have the liquidity to survive...couple that with a historically weak retail model, and news of wholesale and correspondent going down the tubes and they've got a problem.

Hello retail. Hello B of A.

SEP

2007

Mortgage--- B of A is acquiring LaSalle. This will prevent them from buying Countrywide as their percentage of deposits will be too high to pass federal muster. The 12,000 people they fired and the next 8,000 that is rumored to be fired all come from the wholesale divisions, correspondent divisions, and branches that are not producing. They are cutting fat like most other companies.

The government will not let them fail. I think that is clear. Between the $50B infusion, the half-point rate cut, and then the $2B investment by B of A, which some in the banking world believe was egged on by the Fed, I believe the line is drawn at Countrywide.

Aaron, Great post. I am really fed up with all the bashing. Who cares.. Enough already..

Matthew--- I cannot be any more sickof it. Let's just get back to doing to our deals. On another board I post on, every single announcement gets posted and gets tens of comments. I am close to being done with it. Buzz kill.

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