Today, Countrywide Home loans announced they are looking for an additional infusion of cash from investment banks. This is serious stuff, folks. A little more than 2 weeks ago, Bank of America invested $2 billion in Countrwide which effectively purchased 16% of Countrywide's stock. Now, Countrywide is asking for billions more which would indicate a serious liquidity crisis.
I was having lunch with a banker friend of mine today and we were musing about how Bank of America might buy the rest of Countrywide if the price were right. One thing making the rumor mills is if Countrywide is able to secure addtional money, their CEO, Angelo Mozillo, may be asked to leave. One thing is for certain. Expect Countrywide to continue to pare its staff to cut costs. Already reductions of up to 20% have been announced. Look for more as they fight for survival. I expect Countrywide to make it although on a much smaller scale than the loan behemoth they were before.
Stay tuned as this wild ride continues. Remember Adjustable Rate Mortgages will be resetting in large numbers through June of 2008. It could be a bumpy ride until then! Have a great day.
Paul
P.S. If you currently have a loan with Countrywide, rest assured your loan will be taken care of even if Countrywide fails. I get asked this question frequently.
Paul McFadden
Good update with pertinent commentary. Funny about that last bit -- I have had to repeat that to people lately too.
Thanks, Jefferson, for your comments. Have a nice evening!
Paul