ROTFLOL!
This isn't the state you're looking for...move along!
Posted on 10/29/2007 8:59:36 PM PDT by bruinbirdman
Angelo Mozilo, chief executive of Countrywide Financial, on Monday strongly criticised the US government’s response to the collapse of the subprime lending market, saying there had been “zero” effort to tackle the crisis.
“In terms of tangible effort from the federal government...there has been no programme, no federal effort, no legislative assistance – zero,” he said.
He criticised the US government’s refusal to lift caps on the size of loans that can be bought by Fannie Mae and Freddie Mac, the government-sponsored entities created to promote affordable housing.
Fannie Mae and Freddie Mac are prohibited from buying loans worth more than $417,000. Failure to increase this limit would continue to depress the property market and keep first-time buyers out of the housing market, particularly in California, where property is expensive, said Mr Mozilo.
“First-time buyers cannot buy a home now. Only the wealthy and privileged can afford to buy homes,” he said.
Mr Mozilo’s stock sales are being probed by the Securities and Exchange Commission as part of an examination of trading by executives at subprime lenders. He has sold more than $130m worth of Countrywide shares since beginning a stock-sale plan at the end of last year.
Quan Zhu, a former Countrywide vice-president, agreed to pay $108,840 to settle insider trading charges filed against him by the SEC, without admitting or denying the allegation, the commission said yesterday in a statement.
The SEC alleged that Mr Zhu traded in Countrywide stock “while aware of confidential negative earnings information”.
Speaking at the Milken Institute’s State of the State conference in Beverly Hills, Mr Mozilo blamed the subprime crisis on “easy, low-cost money” that drove up house prices and “exotic loans and diminished underwriting standards”.
“People stretched themselves,” he said, though he implied that the blame for the crisis should be shared.
“It takes a village to do this. As long as [house] values keep falling, the subprime situation will get worse.”
Jeff Mezger, chief executive of KB Home, said house prices would remain depressed. “We’re anticipating that it’s going to stay tough for quite some time.”
Countrywide, the largest US mortgage lender, last week announced a $1.2bn third-quarter loss, reflecting $2.9bn of mortgage-related writedowns, credit losses and restructuring charges.
But shares in the California-based lender rose sharply after it said it would return to profitability this quarter.
If a mortgage company made a loan to you, they hold the mortgage note. If that is all a mortgage company does, they would run out of money and end up with mortgage notes. Too get more money, mortgage companies go to banks to get fresh money and in order to do that they must reduce their liabilities by selling the mortgage notes to a remortgage company. These loans are bundled into portfolios (composed mainly of good loans with some risky subprime loans). The remortgage company will buy these bundled notes at discount based on the type of loans (interest rate and duration) and assumes the loans are backed by homes at a certain market price that exceeds the loan amount. Since homes are dropping so fast the re mortgage company cannot set a price to buy these notes from the mortgage company. The concern that too many hidden subprime loans maybe in the bundles have caused many remortgage companies to hold off buying from the mortgage companies. If these mortgage companies cannot get rid of their notes, they cannot get new money from the banks to loan to new homebuyers, carbuyers and businesses. Economic activity will slowdown if people with good credit cannot borrow money to buy homes, large items or expand businesses because the primary lender is shut off from getting fresh money from the banks because they cannot sell off their portfolios of bundled loans. To make matters worst, major investment banks have brought these portfolios from mortgage and remortgage companies and now discover some of these portfolios are riddled with hidden subprime loans. Thus the portfolios are worth less than the price they paid for them. These investment bankers cannot unload these portfolios and now are just writing them off as losses. This is having a psychological affect on the stock market and financial investors.
ooohhhh...good.
Mozillo should be in jail for fraud instead of begging for a government bail-out. He sold his stock before the sub-prime mess blew up, so he was well aware of what lay ahead. The US taxpayer should not bail out crooks like him or the stupid people who thought they could buy his mortgages for no money down.
Perfect example. Home bought in 2000 for $285K was worth $590K, July 2006. Now worth $555K today.
Is that house worth 95% more or 6% less?
Perhaps Mr. Mozilo needs to apply for a subprime loan.
yitbos
Yep. It’s a shame, but what can you do?
If it were me? I would pass a law that encouraged banks to re-structure the outstanding loans in a way similar to what they did in Third World countries.
This is no simple thing, since it would require an army of mortgage people to sit down with every-single-subprime mortgage holder, assess the loan and negotiate a deal. This is no quick fix — it actually requires work.
On the other hand, it doesn’t require the gubmint to put up billions for a bail out.
Perfect example. Home bought in 2000 for $285K was worth $590K, July 2006. Now worth $555K today.
Is that house worth 95% more or 6% less?
It’ll be easier to do the math once/if it drops below $200k in current (not constant) dollars.
Investors (suckers) bought them. Buyer beware. Bet they won't do that again. It would have been in immoral act to let them keep their money, they were lucky to get together with it in the first place.
Whoever owns the mortgages needs to assess them. In a few cases re-structuring might be the best way to mitigate the loss.
Generally they just need to bite the bullet, take the house in due course, and sell it for whatever they can get.
yes. thank u for the great breakdown. Innocent people whom had no share in the greedfest are getting hurt. check out Netbank. My bank reniged on the 100k line of credit increase for my business right in the middle of summer and we have been a very credit worthy customer whom had hit our target rev goals.
We survived just barely. I am none too happy others pissed in my pot. The Bernanke rate cuts are a band aid. We’ll be seeing a replay of August and it will stay that way for awhile. The other greedfest is oil. Combined, lets say I am feeling very bearish right now.
First off- this guy and others like him should be sitting in jail. 2nd off the federal government has done too much already to bail these guys out. Lowering the interest rates is destroying our dollar- driving up the cost of oil- and inflation. Inflation is not 3%...Those are numbers that are manipulated by keeping food and energy out of the picture. Well those are the most important items. Inflation is actually running over 10%. Those who do save are not only seeing less of a return via lower interest rates, but there money is loosing big time in terms of inflation. You could have actually received better than a 10% return in the last year if you had simply put your money in Canadian dollars, and then moved it back into USD and received no interest at all on you money. Add in interest and you would have made out even much better. Maybe 15% return. Pretty sad. Our whole economy and financial system is being trashed by these guys, and they are crying about not getting more hand outs. It was the government policy that made it possible for us to get into this mess in the first place. The bankers and the real estate people, and others have been getting away with things that they should never have been allowed to do. And we are going to pay in a very big way for that now. Well this guy is under investigation by the Sec for selling many of his shares in Countrywide right before Countrywide tanked. I hope they nail him for that and more. It is so complicated to explain if you have not been following it all.
“The mortgage banks don’t hold the loans anymore.
Investors (suckers) bought them. Buyer beware. Bet they won’t do that again. It would have been in immoral act to let them keep their money, they were lucky to get together with it in the first place.
Whoever owns the mortgages needs to assess them. In a few cases re-structuring might be the best way to mitigate the loss.
Generally they just need to bite the bullet, take the house in due course, and sell it for whatever they can get.”
Those CDO’s have not really unwound yet. When they do then it is going to get really bad.
Yeah, the banks do own them. They were used as collateral for loans by hedge funds and other financial institutions.
Mr. Mozilo, you greedy putz. You made your bed, now lay in it, bed bugs and all!
ROTFLOL!
This isn't the state you're looking for...move along!
Bet it’s a heckuva nice bed!
NEW YORK (Reuters) - Countrywide Financial Corp. (CFC.N: Quote, Profile, Research) said on Friday in a regulatory filing that Chief Executive Angelo Mozilo in 2006 received a $42.98 million of compensation and had a $78.87 million gain from the exercise of options and vesting of stock awards, as shares of the largest U.S. mortgage lender rose 24 percent.
Compensation included a $2.87 million salary, $19.01 million of option awards, $20.46 million of non-equity incentive awards and $643,205 of other compensation.
Mozilo, 68, also had a $72.21 million gain from the exercise of 2,355,769 stock options, and a $6.66 million gain from the vesting of 170,002 shares.
Compensation is based on salary, bonus, the value of stock options and other awards granted during the year, and incentives and perks. Countrywide disclosed Mozilo’s pay package in a U.S. Securities and Exchange Commission filing.
Profit at Calabasas, California-based Countrywide rose 6 percent last year to about $2.68 billion, or $4.30 per share.
Exactly!
I read that 33 percent of new loans in CA were interest-only loans — so when the value of the home drops there’s no equity, and they can only sell at a loss, still owing equity.
There’re a lot of stupid people in CA.
Nice weather, though.
FR has a pretty representative registration.
I admit I do not scan blogs, vanities nor general chat at FR. I do read a lot of other replies. However, I have not seen nor heard of a personal anecdote on this forum from one person who has lost a house or mortgage. In my whole town of 15,000, I have not heard of someone complaining because they could not afford a mortgage.
The economy is not in recession. Diversified personal portfolios have not suffered huge hits.
Risk takers are complaining only if they bet wrong and they are usually the ones who can afford the hit.
yitbos
No government bailout for these lenders or their clients. It’s their problem, NOT the taxpayers.
Amen!!
Angelo, Angelo, Angelo! Why on earth should I, JoeTaxPayer, pay one dime to bail out your poor business decisions, i.e. lending money to those who could not afford it?
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