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Old 01-30-2008, 10:28 PM   #41
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CNN Money - Countrywide: From bad to worse

Countrywide's bad news - Jan. 29, 2008

Excerpts from article

NEW YORK (Fortune) -- Countrywide on Tuesday reported a loss of $422 million in the fourth quarter and revealed that an astounding one-third of its investment portfolio's sub-prime mortgage loans are delinquent.

The loss threw cold water on Countrywide chief operating officer Steve Sambol's confident assurances to investors in October that, "We view the third quarter of 2007 as an earnings trough, and anticipate that the company will be profitable in the fourth quarter and in 2008." Seen in this light, Countrywide's fourth-quarter loss, compared to a $621 million profit a year ago, is what the numerous class action attorneys circling Countrywide (CFC, Fortune 500) will surely call "an unfavorable fact." Countywide finished 2007 with a loss of $704 million.

End of xxcerpts

It appears that Country Club is in real bad trouble. Sambol's assurances remind me of the assurances that Ken Lay gave the shareholders, the employees, the investors, and the retirees of Enron.

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Old 01-31-2008, 08:25 AM   #42
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CNN Money - Countrywide: From bad to worse

Countrywide's bad news - Jan. 29, 2008

Excerpts from article

NEW YORK (Fortune) -- Countrywide on Tuesday reported a loss of $422 million in the fourth quarter and revealed that an astounding one-third of its investment portfolio's sub-prime mortgage loans are delinquent.

The loss threw cold water on Countrywide chief operating officer Steve Sambol's confident assurances to investors in October that, "We view the third quarter of 2007 as an earnings trough, and anticipate that the company will be profitable in the fourth quarter and in 2008." Seen in this light, Countrywide's fourth-quarter loss, compared to a $621 million profit a year ago, is what the numerous class action attorneys circling Countrywide (CFC, Fortune 500) will surely call "an unfavorable fact." Countywide finished 2007 with a loss of $704 million.

End of xxcerpts

It appears that Country Club is in real bad trouble. Sambol's assurances remind me of the assurances that Ken Lay gave the shareholders, the employees, the investors, and the retirees of Enron.

GOD BLESS
The difference is Bank of America is buying them, and will fire everyone and start over. Bad news or not, BOA bought them for $4 a share, and if mortgage rates continue to go down, there will be another re-fi boom, and BOA will be sitting pretty.........
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Old 01-31-2008, 09:10 AM   #43
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The difference is Bank of America is buying them, and will fire everyone and start over. Bad news or not, BOA bought them for $4 a share, and if mortgage rates continue to go down, there will be another re-fi boom, and BOA will be sitting pretty.........
It takes equity to refinance a home. Most lenders are not willing to exceed a loan to value ratio of 80% on a first mortgage. Housing prices are now in free fall. Aside from the current federal government bailout program encouraging lenders to renegotiate the loans of subprime borrowers, where do you expect the housing equity to come from to support another refi boom?
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Old 01-31-2008, 09:18 AM   #44
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Interesting Countrywide article ... looks like some real fire sales coming over the next couple years!

I view BOA purchase of Countrywide like American's purchase of TWA. Seemed like a good idea ... CEO gets a quick feather for his cap. But long term it's a mistake. Pieces of the company could have been bought for PENNIES on the dollar after bankruptcy.
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Old 01-31-2008, 09:23 AM   #45
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Being a complete neophyte, it is easy to get discouraged when I see something like this...

Bloomberg.com: Worldwide

I don't get it, why does a change in rating cause a loss to the bank...:confused:
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Old 01-31-2008, 09:49 AM   #46
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Being a complete neophyte, it is easy to get discouraged when I see something like this...

Bloomberg.com: Worldwide

I don't get it, why does a change in rating cause a loss to the bank...:confused:
What is also discouraging is the blatant conflict of interest that exists between Standard & Poor and banks. It was American banks that paid S&P to receive the CDO's AAA ratings. It was also the banks who profited with this inflated rating in being able to facilitate the marketing of worthless paper to unsuspecting pension funds, hedge funds and banks around the world.
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Old 01-31-2008, 09:50 AM   #47
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It takes equity to refinance a home. Most lenders are not willing to exceed a loan to value ratio of 80% on a first mortgage. Housing prices are now in free fall. Aside from the current federal government bailout program encouraging lenders to renegotiate the loans of subprime borrowers, where do you expect the housing equity to come from to support another refi boom?
Enter the mortgage insurers, who will cover the piece over 80% for a hefty fee.

Enter the loan modification programs. You can't refinance (translate: get this crappy loan off my books) unless the loan balance is $25k less than what you currently owe? Done.

Oh, and by the way, that 5% loan that was going to reset to an 8% loan 6 months ago? Now it will reset to a 5% loan, maybe less if the fed keeps cutting.
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Old 01-31-2008, 10:01 AM   #48
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Enter the mortgage insurers, who will cover the piece over 80% for a hefty fee.

Enter the loan modification programs. You can't refinance (translate: get this crappy loan off my books) unless the loan balance is $25k less than what you currently owe? Done.

Oh, and by the way, that 5% loan that was going to reset to an 8% loan 6 months ago? Now it will reset to a 5% loan, maybe less if the fed keeps cutting.
There will not be a refi boom in 2008 for two reasons:

1) Many people will no longer be able to quafy for a loan because only prime loans are available.

2) Home equity is now a problem, especially given the number of people who bought in the past few years, refinanced in the past few years, or used up all of their home equity in the past few years.

Many lenders will go up to 90% or 95% LTV on a purchase, but could you please name some lenders that will exceed an 80% loan to value on the refinancing of a first mortgage for someone that does not already have a 90 or 95% loan?


Another Refinance Boom - With a Difference - Searchlight Crusade
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Old 01-31-2008, 10:11 AM   #49
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Throw a rock in a room of bankers and you will hit one that will go over 80% on a first lien. So long as ether the borrower pays for PMI or the rate gets grossed up and the lender pays it.
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Old 01-31-2008, 10:22 AM   #50
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Throw a rock in a room of bankers and you will hit one that will go over 80% on a first lien. So long as ether the borrower pays for PMI or the rate gets grossed up and the lender pays it.
With all due respect, most lenders offer a 90% or 95% loan on a purchase, but it is extremely rare to find one who offers higher than 80% LTV on a refinance. You can exceed an 80% LTV on a home equity loan, but rarely on a first trust deed. The exception would be if someone tried to refinance an existing 90% or 95% loan. But, with the costs of PMI being 1% for a 95% loan and 1/2% for a 90% loan I don't think it would be worth it for a borrower to do it, because these fees would come out of the loan proceeds at the close of escrow. The main problem we have today with borrowers who have PMI--is that they're more than likely upside down on their loan anyway are only going to qualify for a Bush/Paulson bailout mortgage rewrite. As the referenced article in my last post suggests, we may be in a mini-boom in refinances, but we will not see anything like we have seen during the few years when subprime financing was available.
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Old 01-31-2008, 10:26 AM   #51
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Yes, the world is going to end! Dogs and cats will be living together in sin! We'll all be eating dog food because nobody will be able to refinance! Panic! Panic!! Panic!!!

You sound like a gold salesman or short seller: accepting no facts counter to your worldview of a smoldering dustheap. Good luck with that.

As for there being no refi boom, take a look at the stock price of any publicly traded title insurer over the last two weeks.
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Old 01-31-2008, 12:38 PM   #52
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Interesting Countrywide article ... looks like some real fire sales coming over the next couple years!

I view BOA purchase of Countrywide like American's purchase of TWA. Seemed like a good idea ... CEO gets a quick feather for his cap. But long term it's a mistake. Pieces of the company could have been bought for PENNIES on the dollar after bankruptcy.

BAC got countrywide for free pretty much, but even $4 billion is too much to pay.

they are buying a bunch of people that can leave anytime they want and some assets whose value is around $0 at what BAC paid for them. not like they are getting any patents or something else no one can replicate
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Old 01-31-2008, 12:44 PM   #53
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BAC got countrywide for free pretty much, but even $4 billion is too much to pay.

they are buying a bunch of people that can leave anytime they want and some assets whose value is around $0 at what BAC paid for them. not like they are getting any patents or something else no one can replicate
They bought a list of clients that need to be weeded out, and a distribution network. If they can restructure it at all, they will have a MUCH larger capacity to meet demand in the future.

$4 billion is NOT a lot of money for a large bank.......
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Old 01-31-2008, 11:30 PM   #54
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CNN Money article - New $20B subprime bailout on the table Senator Chris Dodd proposes setting up a fund that would buy defaulting subprime mortgages and restructure loans for borrowers

New subprime bailout on the table - Jan. 31, 2008

It looks like a possible government bailout.

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Old 02-01-2008, 08:14 AM   #55
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...interesting, it's the Resolution Trust Corp. allll over again.

Seems to me, throwing $20B at this is like peeing into the ocean.
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Old 02-01-2008, 08:23 AM   #56
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...interesting, it the Resolution Trust Corp. allll over again.

Seems to me, throwing $20B at this is like peeing into the ocean.
I wonder if New Orleans could use an extra $20 billion these days..........
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Old 02-01-2008, 08:35 AM   #57
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I wonder if New Orleans could use an extra $20 billion these days..........
Yes, but I'm not holding my breath and neither is anyone else down here. The country's intention for our future has been made quite clear. Nevertheless, we will continue, just out of spite if nothing else.
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Old 02-01-2008, 12:20 PM   #58
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The US doesn't HAVE a spare $20,000,000,000. We'd have to print it up.

Oh Oh, Looks like the Fed is doing just that as we speak!
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Old 02-01-2008, 12:25 PM   #59
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By the way, the Brewmeister is right.
The country is not economically collapsing.
Just 99% of the population is.

Brew and I will be OK.
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Old 02-01-2008, 06:14 PM   #60
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CBS News article - U.S. Economy Suffers Another Body Blow -Employers Cut 17,000 Jobs In January - First Such Reduction In More Than 4 Years
http://www.cbsnews.com/stories/2008/02/01/national/main3778228.shtml

Hopefully this will not be the last body blow to put the U.S into a recession and then throws the U>S into a depression.

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