Country Wide is not out of the woods yet!
And this time they have not come out to deny that they are in serious hot water as it seems to be their customary policy. This time it appears to be 100% true. If you haven't read, the CW Giant has just written down more losses; it seems that they have found themselves in a siutation in where they owe more debt than they own in value of performing assets! What's worse is that a few of the portfolios of assets that they are counting toward their performing assets are questionable at best.
Bank of America is planning to renegiotiate the deal from $7 per share to $2 per share or less... and if they cannot come to terms they are considering walking from the deal just like Microsoft did to Yahoo. If BofA walks from the CW deal Cw can definitely not stand on their own legs right now. We may see another government bailout; as bad as that is for the economy overall... or we may see the Giant fall and cause a terrible rippling affect throughout the finacial hemisphere of our national economy!
If CW falls so soon after Bear Sterns we will see more of a restriction of credit lending guidelines and it will become even more difficult to obtain financing. Good borrowers will be denied and great borrowers will be scrutinized. Underwriting teams across the board for the best lenders will reduce the appraised value of peoples homes and many loans will be denied as a result of declining market conditions!
A lot of bad things will happen to good people and the nation as a whole will suffer because of the huge gape in our economic engine. Credit in every industry is falling apart at the seams; cars are being repossessed, homes are being foreclosed on, and debts are being sent in to collections.
We are feeling the pinch the most in the real estate and real estate financing industries because they have been carrying the economy for many years; after all they are the largest most common investments for the average person.
In the coming months underwriters are going to be wary and it is important to make sure that you are working with a professional. If you do not know someone seek a referral from someone you trust. Times are too tough to trust just anyone to such an important transaction, so find a professional and do your research to make sure that you fully understand the terms of the transaction before you sign on the dotted line!
Christopher Ohlsen
Mortgage Advisor