Posted on 08/17/2007 9:03:30 AM PDT by Sleeping Freeper
Anxious customers jammed the phone lines and website of Countrywide Bank and crowded its branch offices to pull out their savings because of concerns about the financial problems of the mortgage lender that owns the bank.
Countrywide Financial Corp., the biggest home-loan company in the nation, sought Thursday to assure depositors and the financial industry that both it and its bank were fiscally stable. And federal regulators said they weren't alarmed by the volume of withdrawals from the bank.
The mortgage lender said it would further tighten its loan standards and make fewer large mortgages. Those moves could make it harder to get a home loan and further depress the housing market in California and other states.
The rush to withdraw money -- by depositors that included a former Los Angeles Kings star hockey player and an executive of a rival home-loan company -- came a day after fears arose that Countrywide Financial could file for bankruptcy protection because of a worsening credit crunch stemming from the sub-prime mortgage meltdown.
The parent firm borrowed $11.5 billion Thursday by using up an existing line of credit from 40 banks, saying the money would help the lender meet its funding needs and continue to grow. But stock investors, apparently alarmed that the company felt compelled to use the credit line, sent Countrywide's already battered stock down an additional 11%.
(Excerpt) Read more at latimes.com ...
I wonder how this will affect folks with CW mortgages? I have a 10 year fixed with about 4 years left.
Shouldn’t affect them at all. If CW goes under, someone will buy the mortgage and then they will be the ones cashing the check you send each month.
A run is only worthwhile if you have more than the insured limit in the bank. And if you’ve structured your accounts properly so that you have multiples of the insured limit, taking your money out can convert insured deposits into uninsured ‘deposits’ if you aren’t really careful.
a company managed as badly as countrywide ought to fail. their entire processing operations cannot handle insurance policies of six months duration, only annual ones.
then they cannot send a check to the correct address, even when directed and hand-held.
they have offices to originate mortgages, but the staff therein cannot service them once they’re made.
So, what is happening today?
I would suggest that you keep your monthly statements; don't underestimate the ability of lenders to make errors (generally in their favor) when servicing gets transferred.
Yep, I keep the statements.
I wouldn’t worry, then. If you still escrow, just keep a close watch to make sure that they actually pay the insurance and taxes on time, but you probably don’t need to do anything at this point.
‘scuse me, but aren’t deposits insured by the Feds?
It depends on how much you have in there..... And even if it’s federally insured, it may take a while to work through the mess....
oop’s left out and they are FDIC insured.
I just spoke to a friend of mine who just applied for a job with and was hired by CW here in Fla. I told him he can expect to be a hero or a zero and he agreed.
Looks like these folks have never heard of the FDIC.
Some of the folks yanking out money had deposits greater than the FDIC coverage limits. In other words, their money would be at risk if Countrywide went belly up.
That's certainly possible but how stupid do you have to be to have that much money on deposit at 4.5% (or less)?
3-month stock PPS chart......those watching this closely (and the insiders, of course) got theirs out a few weeks ago......
http://finance.yahoo.com/q/bc?s=CFC&t=3m&l=on&z=m&q=l&c=
No effect. The mortgage note is an asset on their books; if Countrywide BK’s, then the notes are merely sold off to pay their creditors.
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