How long?

[david_mcmanus]

[casey1167]

[SunTzu]

[casey1167]

[jillayne]

[Lake Hills Renter]

[finance]

SunTzu - You are incorrect! Countrywide can borrow from the FED (Atlanta FED) and has almost maxed out the amount they can borrow, there was even a huge article about it and WaMu borrowing rates in the WSJ several weeks ago.

[casey1167]

Finance - Sir, the problem is, little people like me do not have spread sheets big enough to really understand how CFC finances it's self. I read their financial statements, and notes, and at the end I was lost as to were the money was going to come from in the future, although it was evident were is had come from in the past. Everything I have read points to them being maxed out in all areas, and all the collateral has not only been spoken for, but spoken for more than once. I don't think people want to lend if thier third down on the subordinated issue....

[TJ_98370]

..
An article dated 26 Nov 2007:



.....In a letter to the regulator of the Federal Home Loan Bank system, Sen. Charles Schumer said Countrywide, the largest U.S. mortgage lender, may be abusing the program.

At the end of September, Countrywide had borrowed $51.1 billion from the Federal Home Loan Bank system -- a government-sponsored program.

"Countrywide is treating the Federal Home Loan Bank system like its personal ATM," Schumer, a New York Democrat who heads the housing panel of the Senate Banking Committee, said in the letter. "At a time when Countrywide's mortgage portfolio is deteriorating drastically, FHLB's exposure to Countrywide poses an unreasonable risk."......

---------------------------------------------------------------

While the article is dated (August 2007) I found it helpful in understanding CFC's situation



What is the problem at Countrywide?

"The country's largest mortgage lender by volume has lost access to some sources of the money it needs to make home loans. The main problem so far is in the market for commercial paper, where companies borrow money for periods from one day to about three months. As of June 30, Countrywide relied on commercial paper for about $13 billion in financing, which it used to make loans that it would then turn around and sell to government-sponsored mortgage companies such as Fannie Mae and Freddie Mac or to private investors. In the past year, Countrywide had made an average of about $41 billion in loans every month, most of which it sells directly to Fannie Mae and Freddie Mac."


How is Countrywide different from other troubled mortgage banks in the headlines?

"Many lenders that have closed or filed for bankruptcy protection in the past several months have been mortgage banks, which borrow short-term in credit markets, lend to home buyers, then sell the loans to Wall Street banks or keep them as investments. They aren't banks in the usual sense and don't take deposits."

"Countrywide, by contrast, is a savings and loan holding company that includes a thrift unit, Countrywide Bank FSB, and mortgage bank unit, Countrywide Home Loans. That gives it more ways to borrow money than would be available to a mortgage bank alone. The thrift takes deposits, can borrow from the Federal Reserve and Federal Home Loan Bank and has short-term financing agreements with private banks."
..

[deejayoh]

[TJ_98370]

.
Perhaps some confusion stems from the fact that Countrywide Financial Corp has a banking segment and a mortgage banking segment. The bank, Countrywide Bank FSB, takes deposits and can borrow from the Federal Reserve and Federal Home Loan Bank. Apparently the mortgage bank, Countrywide Home Loans, cannot borrow from the Federal Reserve Bank.




....MOZILO: Well, we have a bank. And the bank can use the discount window. The situation with Countrywide, Susie, is that the bank has access -- the bank is highly profitable bank. It has been a great bank. It's well capitalized, has access to the window, but the assets, much of the assets that we have are not in the bank. They are in the mortgage bank that doesn't have access to the window. So we are trying to continue to restructure and reorganize Countrywide so that the entirety of Countrywide has access to the Fed. So we have -- so we have liquidity....

------------------------------


.

[deejayoh]

TJ - thanks for the clarification. The story to which finance was referring was about countrywide leveraging the Atlanta FHLB.

http://www.mortgagenewsdaily.com/112620 ... chumer.asp

They've borrrowed $51B from FHLB. doubt they even had time to talk with the Fed!

I saw the piece about them trying to move their assets to the banking side a while ago - it seems that in their race to outrun bankruptcy they haven't managed to make the transition

[david_mcmanus]

Yay, 2 bill in losses!

Everything is fine, though, move along, nothing to see here!