Countrywide Crushed Again (Lost another 16% of their stock value to Ditech)

http://www.thestreet.com/s/countrywide-crushed-again/newsanalysis/banking/10373527.html?puc=_dm ^ | 8-10-07

[Hydroshock]

Countrywide (CFC - Cramer's Take - Stockpickr - Rating) plunged 16% in early trading a day after the struggling mortgage lender warned in a regulatory filing that mortgage market disruption could hurt the company's financial condition.

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"Since the company is highly dependent on the availability of credit to finance its operations, disruptions in the debt markets or a reduction in our credit ratings could have an adverse impact on our earnings and financial condition, particularly in the short term," Countrywide said in the risk factors section of a filing made late Thursday.

Countrywide shares have been tumbling since problems with the subprime mortgage market came to light back in February. The stock hit a 52-week high of $45 just before rivals like HSBC (HBC - Cramer's Take - Stockpickr), New Century (NEWCQ - Cramer's Take - Stockpickr) and NovaStar (NFI - Cramer's Take - Stockpickr - Rating) said they would take big losses on loans gone sour to homeowners with poor credit histories. New Century subsequently filed for Chapter 11 bankruptcy.

Countrywide dropped as low as $23 Monday amid worries about the health of the credit markets before bouncing back during a widespread market rally earlier this week.

Shares fell $4.61 early Friday to $24.05.

[Hydroshock]

Ant eh sad part is it will nto help in the long run, this is a bandaid on a sucking chest wound. Once the arms reset in October adn Febuary is when it will get interesting.

[Moonman62]

Polly want a cracker?

[VegasCowboy]

ARM’s still can’t adjust beyond their parameters - i.e., the margin and index. The only way this affects ARM rates is if the indexes like MTA, LIBOR, and COFI go up, and, if anything, they’ll probably go down once all this hubbub calms down.

Yep.

[Orange1998]

Trump on CNBC. I wonder if he is loaded up on adjustables.

[nicollo]

Not everyone is freakin’ out. I mean, somebody’s buying CFC, and for good reason. Maybe it’s got more to burn, but with all that cash, the stock price is heading into giveaway status.

[Toddsterpatriot]

I know what you mean. LOL!

[Lonesome in Massachussets]

Just wondering: Who’s stoopidah, the people who took out these loans they couldn’t repay or the folks who made them.

[Hydroshock]

The ECB and the Fed for throwing money out to cover them both.

[Toddsterpatriot]

The ECB and the Fed for throwing money out to cover them both.

Providing liquidity is the same as throwing money out?

[Hydroshock]

This was like air dropping diesel on a forest fire. It will not solve the 2 underlying causes of the problem, trillions in home values lost adn teh arms that are resetting. If anything this will make it worse.

[Toddsterpatriot]

This was like air dropping diesel on a forest fire.

Providing liquidity? That's funny. Wrong, but funny.

It will not solve the 2 underlying causes of the problem, trillions in home values lost adn teh arms that are resetting.

Nobody said that it would. Nobody said that's the purpose of providing liquidity.

If anything this will make it worse.

[Hydroshock]

We sahll see, on Oct. and Feb. when the ARMs reset.

[Toddsterpatriot]

Is that when the liquidity diesel will catch fire?

[Hydroshock]

Scoff if you will but we will be in a recession by this time next year, if not 6 months.

[Toddsterpatriot]

Scoff if you will but we will be in a recession by this time next year, if not 6 months.

Because adding liquidity made things worse?

[Hydroshock]

There is going to be a market correction, the longer we put it off by throwing cheap money at it the worse it will be. The time to stopped this was 24 to 18 months ago by tightening lending standards. No I am afraid it is inevitable.

[Hydroshock]

They would have been wiser to let it ride until at least Monday to see what shakes out. I see this as a poorly thought out knee jerk reaction, not prudent policy.

[dragnet2]

NEW YORK (MarketWatch) — Fed fund future prices suggest the U.S. Federal Reserve will be forced to do an emergency inter-meeting rate cut within the next week

I predicted this over a week ago. We're going to see substantial interest rate cuts soon...Starting no later than next month.

[Toddsterpatriot]

There is going to be a market correction, the longer we put it off by throwing cheap money at it the worse it will be.

You know that providing liquidity is not the same as "throwing cheap money at it"? I guess not.

No I am afraid it is inevitable.

So what's our GDP growth going to be for all of 2007? How much will GDP shrink in 2008?

[gogeo]

Nothing at all.

Countrywide is well capitalized and will weather this storm fine. The regulatory filing was required for the protection of investors. It isn't a signal that they are in some kind of financial distress.

Even if something did happen, your mortgage is a contract and would have to be honored. You might have to send your payments to a different address, but the terms of the note cannot change.