Countrywide Financial Hustles To Regain Footing

Sep 16th, 2007 @ 5:49 PM by Alden Smith

In the bleak sub-prime market, Countrywide Financial Corporation is struggling to keep a good grip on its financial holdings.  Already laying off over 12,000 employees, they are feeling the fallout of the problems the housing market has rendered.  Countrywide has all but eliminated risky sub-prime loans in an attempt to regain footing.  The company, established in 1969 by a two man startup has become the nation’s leading mortgage lender by deftly riding out housing boom-and-bust cycles.  Their closest competitors are Wells Fargo.

What Has Countrywide Done To Survive?

Countrywide has been forced to borrow billions of dollars, most notably from Bank of America, who loaned the struggling company money to stay afloat.  The company has drawn on an $11.5 billion line of credit, and raised an additional $2 billion by selling a stake to Bank of America. Reportedly this week Countrywide has boosted its borrowing capacity by taking on new and existing credit agreements to the tune of $12 billion.

Allegations Against Countrywide

The New York times reported that several unnamed employees of Countrywide have made allegations against Countrywide, stating that the company has used financial incentives to encourage employees to steer borrowers into sub prime loans to boost profits.  This prompted North Carolina Treasurer Richard Moore to send a letter dated Tuesday to Countrywide asking for an explanation. Moore is a trustee of a pension fund that currently holds over $11 million dollars worth of Countrywide shares.  “Countrywide has sacrificed long-term sustainability for short-term profits,” Moore wrote. “As an investor, I expect assurances that these practices have ceased and that the company is returning to a business model that both respects consumers and protects shareholder value.”  Countrywide of course denied the allegations.

What’s Ahead for Countrywide

Chief Executive Angelo Mozilo reports Countrywide is “well positioned and extremely optimistic about our prospects to continue generating growth and superior returns over future cycles.”  Many analysts feel that Countrywide will weather the storm.  To appease investors, Countrywide has implemented layoffs and shifted its loan production through its banking arm.  Obviously, Countrywide knows what they are doing.  There seems to be hope for their future if they play their cards right.

One Response to “Countrywide Financial Hustles To Regain Footing”

1. FHA says:

   January 28, 2008 at 1:53 pm

   Countrywide will weather the storm, it is a long road but them will survive.