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Black Monday Coming? Countrywide Mortgage Going Under?

By James Lowenstern

Real Estate Sales Representative with Castles Unlimited®

July 28, 2007 01:10 AM

If you were in the real estate business in 1987, or for that matter alive in that year, you will undoubtedly remember "Black Monday" as the day the DJIA lost a major percentage of value and threw the US into a lengthy recession. The week before that day the Dow had major sell-offs like we had this past week. What happens if this Monday we have a similar sell-off and the economy now "officially" goes into a recession? What will happen to interest rates, the real estate market, foreclosures, the economy in general and more specifically...your business?

In my blog yesterday I wrote about those years in the late 1980's and early 1990's and what it was like to be in the real estate business during a recession. Anyone remember the "RTC"...Resolution Trust Company? Bank Of New England was the largest bank in my area of the country and it went under. It held mortgages on properties that were worth far less than what was owed. The foreclosure rate drove that company into the ground. Sounds like the subprime mortgage lenders of today. Countrywide Mortgage owes me less that $500 on an ad they ran along with me back in February. They don't have the money apparently because they still haven't paid for the ad. It would be funny if I didn't think that it means more than the $500 ad...I think it means that Countrywide Mortgage is heading South. Their shares were off this week and pretty much started this broad market sell-off on Wall Street. I guess I'll never see that $500...advice to everyone dealing with mortgage brokers these days...get the money up front. No kidding.

I don't think we have seen the last of the pain yet. The President is totally AWOL as far as I'm concerned. The war he got us into is probably the last thing on his mind. The Federal Reserve is still doing its best to squash inflation while our homes decrease in value daily. Congress is busy trying to decide if XM and Sirius should merge and what subscriber fees for satelite radio should be while the economy totally falls apart. Keep the faith and as I said yesterday...get busy and creative. A responder to yesterday's blog said it best..."Only The Strong Survive". Be strong!

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Liz and Tim Frangioso

Keller Williams Realty - Chicopee, MA

Grim but true. I would like to know where the feds where when they let the banks make all these bad loans in the first place?

Jul 28, 2007 01:13 AM

Monica HCP

HCP - Phoenix, AZ

I think the best lesson to be learned from the past is to DIVERSIFY!

Jul 28, 2007 01:16 AM

Judi Glamb

Coldwell Banker Hearthside - Hellertown, PA

Associate Broker, ABR

I heard an anaylst or a reporter on a news show last night respond to a question about the future of real estate next year - her answer "if I knew, I would be able to retire". At least she was honest.

I've not heard great things about Countrywide... only time will tell.

Jul 28, 2007 01:24 AM

Matthew J Blum - (retired from the business)

Palm Beach Gardens, FL

James I have been saying this for awhile. The president of CountryWide keeps selling off his stocks. Everytime he can he sells the maximum that he can. What does this say about the state of the Company if the presidents keeps doing this?

Jul 28, 2007 01:28 AM

DDR Realty

DDR Realty - Newburgh, NY

Orange County NY

Interesting reading James. I am curious what explanation is Countrywide giving for not paying their debt to you?

Jul 28, 2007 01:35 AM

Anonymous

expect a federal bailout to come. It will fix the last batch of problems and create all new ones

Jul 28, 2007 01:37 AM

James Lowenstern

Castles Unlimited® - Newton, MA

Castles Unlimited. Newton MA Real Estate

BTW..Countrywide's manager says that they will pay (the last time he promised me that they would pay was over 90 days ago...if you don't pay Countrywide on their loans in 90 days they ruin your credit rating)...or he doesn't return calls...I own a Weichert office with almost 40 agents right now and I'm President of their broker council...doesn't seem like a good business move for Countrywide over $500 does it? I just don't think Countrywide can afford to pay for its ads anymore...sad...this was one of the top 5 lenders over the past several years and now they can't pay for their ads.

Jul 28, 2007 01:40 AM

Jeffrey Tumbarello

South West Florida Real Estate Investment Association - Fort Myers, FL

expect a federal bailout to come. It will fix the last batch of problems and create all new ones

Jul 28, 2007 01:43 AM

Paul Moye

Benchmark Realty - Franklin, TN

Broker, GRI, SRES

Good lead in...I do not think Countrywide is going under nor do I not think we are near anything like we had in the 1980's but if we do not stop making the same mistakes we will most certainly re-create those types of economic issues. Now from a Broker standpoint...I would have already called the Countrywide Regional Office and explained to them the + & - of not paying one my agents.

Jul 28, 2007 01:49 AM

SHAUN WREN

LICENSE IS NOT PLACED - Lakeland, FL

I received an email that said that countrywide stopped paying their rent in on of our local offices. Looks like the fraud has really hurt them. I hope they are able to restructure and recover. They have some really great products.

Jul 28, 2007 01:59 AM

Scott Daniels Florida Real Estate 2.0. Agents Earn 100% Commission.

Florida List For Less Realty, Inc. Broker/Owner. - Cooper City, FL

I haven`t heard about this rumor, nor have my friends who work at CW... This is pure babble my friend.

Jul 28, 2007 02:10 AM

David Spencer

Keller Williams Northland - Kansas City, MO

Show Me real estate in Kansas City

The answer back then was the RTC. Maybe its time to blow the dust off and get it going again. I made money with RTC and would do it again. The market came back in about four years.

Jul 28, 2007 02:11 AM

James Lowenstern

Castles Unlimited® - Newton, MA

Castles Unlimited. Newton MA Real Estate

Looks like Scott Daniels gets his AR points by writing negative responces...it takes all kinds. Thanks for being a faithful reader anyway Scott.

Jul 28, 2007 02:22 AM

Doug Capps

Guaranty Bank & Trust Co - Hernando, MS

CLO, CRMS, MMS

James, good post. I've been following different companies since the beginning of the subprime meltdown 4 months ago, aka. "lendron." CW's president has been selling off stocks for a good while, which should be an indicator that things don't look great on the horizon. Just the other day, Wells Fargo Subprime shut down. It's only a matter of time until this affected the "big boys."

I'm trying to stay "upbeat" as possible, but it's really going to be interesting to see who's left after all the dust "finally" settles and what shape the real estate industry is in. I think, unfortunately, that we're still in for some tough times ahead.

Jul 28, 2007 02:46 AM

Lane Bailey

Century 21 Results Realty - Suwanee, GA

Realtor & Car Guy

If you look objectively at the economic indicators, you'll see that we are in a VERY different situation that we were in 1987. Employment is at record high levels. Interest rates are still historically low. We need to burn off some of the huge gains in the Dow so far this year, and home values aren't really tanking (except in some coastal markets that had huge growth in the last few years). We also have had huge economic growth over the last few years despite the war, and a democrat congress that is less popular that a flaming bag of dog poo... and less effective, too. But, I digress.

Jul 28, 2007 03:00 AM

Leo Namiot - LeoLends.com

Canopy Mortgage - Leo Namiot - Saint Augustine, FL

More than just great rates

The mortgage industry as a whole is getting hit hard and mostly it's the major lenders who over exposed themself.

http://www.reuters.com/article/bondsNews/idUSN2543727420070725

http://www.reuters.com/article/businessNews/idUSN2645733220070726

http://www.forbes.com/markets/2007/07/26/ahm-mortgage-layoffs-markets-equity-cx_ra_0726markets42.html?partner=aoltix

Jul 28, 2007 03:38 AM

James Lowenstern

Castles Unlimited® - Newton, MA

Castles Unlimited. Newton MA Real Estate

Thanks for those links Leo...nice to see that the President of Countrywide is still paid well...maybe I'll send my invoice to him.

Jul 28, 2007 03:48 AM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

James, I'm a very optimistic guy BUT we are in for a rough ride and in my opinion it is going to be a lot worse than what people think. Values are already down 25% in my market(Poinciana Fl) and are plummeting rapidly. Homes in my market will be back to pre boom prices very quickly at this rate. I turned down 5 listings this week due to being waaaay over financed. ALL had Countrywide mortgages. They WILL be foreclosed on. And this is only the tip of the iceburg. Optimism will only get us so far.

Jul 28, 2007 08:46 AM

Matthew J Blum - (retired from the business)

Palm Beach Gardens, FL

James, notice the country wide employee won't post his/her name.. Probably because they want to make sure their check will clear...:-)

Jul 28, 2007 09:26 AM

James Lowenstern

Castles Unlimited® - Newton, MA

Castles Unlimited. Newton MA Real Estate

To The Countrywide Employee...Thank you for letting us know how great things are in the mortgage markets these days...we believe you...now pay for your advertising!

Jul 28, 2007 03:34 PM