More hype to manipulate the market.
Precisely. Someone's stoking the panic.
Countrywide rumors I don’t think are manipulative... they’ve made tons of questionable loans and the paper market is dead even for good loans.... if they find they can’t sell their paper and get stuck actually having to hold most of the notes they have written, they’ll cashflow crunch quickly.
If CountryWide can't get anyone to buy their securities (and who WOULD, conisdering their only goal is to close the deal...how strident are their "standards"), they don't have money to fund loans.
Even some loans with funding commitment...in escrow...are failing once the final step is taken to fund.
This is a VERY serious issue roiling the mortage business. The only people with money are the banks...and they're lending in accordance within strict "conformance" of the FannieMae and FreddieMac standards...the only way left to distribute risk.
The liquidity issue is a concern for them; if people panic.
There are too many TV shows and seminars about stock market gambling plans. There are going to be some very unhappy day traders when Countrywide shows them that they are solid with very reliable loan portfolios. This is not much different from last years losers in the oil and gas gamble. The problem is that the gamblers are running up some costs for the average investor and the average consumer, before the bottom drops out for the gambler. Oil should be $45 or less and the loan industry is still solid.