- Rates ain't going no where..."The combination of softness in the housing sector, contractions in credit, increased uncertainty & volatility, and losses in wealth make the chances significantly greater now," per former Treasury Secretary Lawrence Summers
- Deutsche Bank said financial markets are starting to stabilize & they're having no difficulty in borrowing.
- Thornburg Mortgage, Inc. sold $1.44B of mortgages to pay down credit lines & free up financing to accelerate new lending.
- Issued $500M of convertible preferred stock to reduce dependence on credit lines & bolster cash reserves
- Countrywide Chairman & CEO Mozilo in September 2006:
- "I have 53 years of experience; lived through 25% prime, 17.50% mortgage rates & 10% unemployment."
- "CW's proprietary technology would help meet its goal to avoid any foreclosure."
- CW invariably kept to prudent underwriting guidelines to insure adjustable-rate borrowers could handle the highest interest rates that might kick in during the life of their mortgages."
- "This is when we shine....as an industry leader and a role model to others in terms of responsibility lending."
- CW suggests that mortgage pricing & underwriting standards during the housing boom were set by the most aggressive -- that is, least rigorous -- lenders, and that it was all but powerless to impose its own standards.
- Prisoner of competitive trends!!!!
- In a letter to federal bank regulators in May 2007; CW acknowledged that it often judged its customers' creditworthiness for sub-prime adjustable mortgages on whether they could afford payments at a loan's low initial "teaser rate" not at the much higher rates that might kick in 2 or 3 years after the loan was made.
- 60% of its borrowers would not qualify for a loan under current conditions
- CW concedes that its vaunted proprietary system for estimating loss probabilities & delinquency rates was bamboozled by real-world conditions....its been recalibrated.
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