Posts for Ticker ‘Countrywide’

10 CEO’s That Need To Leave in 2008: Angelo Mozilo of Countrywide (CFC)

When all the CEO’s and corporate officers are lumped together for playing down the sub-prime mess in the summer and for all the sub-prime loans that were made, one CEO is thought of as the proverbial poster child.  This is Angelo Mozilo of Countrywide Financial Corporation (NYSE: CFC).

Before you think that we are just calling for him to leave openly, we are not.  In fact it is the opinion of 24/7 Wall St. that he has dodged the biggest bullets already and that the board of directors won’t try to fire him nor that they will be pressured to.  This is even sort of his show as far as we are concerned because he’s not only Chairman and CEO.  He’s also the founder.

This is actually a prediction piece, and 24/7 Wall St. thinks that at some point in 2008 when and if the dust settles in all the mortgage soup that Mozilo will announce his retirement and succession plans.  But…. we think that the retirement may only be as CEO and it is possible that he’ll stay at Countrywide as non-Executive Chairman.  We also believe that he’ll be able to take basically as long as he wants to name a successor and it may be 2009 before he is out.  He’s roughly 68 years old, so he isn’t at any crucial age in today’s world.

All things being equal, it is also the belief of 24/7 Wall St. that  Countrywide will survive and likely thrive again in the future.   That may of course change if there are more insurmountable developments that come across the news tape, but that is our opinion as of today.  It’s obviously not entirely out of the woods but it isn’t in the graveyard either.  Shares are down almost 75% from 52-week highs of $45.26, but they are also up almost 50% from lows of $8.21 in recent weeks. 

  • While the criticisms have been harsh, we do not actually hold his personal stock sales as anything we’d raise much of a stink about like many others have.  These sales were all under a planned 10b5-1 sale program and he was never a serial stock seller before.  His case to the SEC inquiry should actually be easy to prove that he didn’t get to sell out at the top and leave everyone else holding the bag.
  • He didn’t do Bank of America (NYSE:BAC) any favors when he came out the day after their $2 Billion equity stake and predicted on CNBC that the U.S. economy is almost certain to go into a recession.
  • Press about Countrywide paying large bonuses to their mortgage brokers when the mortgage was a bad deal for the home buyer didn’t help.
  • Analysts are still well above current stock prices with their older price targets that haven’t been fully updated.
  • Some have called for the axing of Mozilo.  They were also hit quite hard for the harsh wording in their SEC Filings
  • Mozilo in an interview yesterday with CNBC’s Maria Bartoromo said he had discussed this current mortgage bailout package with Paulson, so if this actually comes to pass it will likely be the stabilizing act that keeps the company easily intact and out of the public spotlight like it had been in recent weeks and months.  But the sub-prime rate freeze may help him as long as there are not waves and waves of foreclosures.

because everyone ran for the hills.Once again, we do not believe that Mozilo can’t survive nor do we believe that he has to leave the company as of today.  We just think he’s going to announce a quasi-retirement that won’t really be a full retirement.

GUIDELINES FOR CEO’s THAT NEED TO GO

Jon C. Ogg
December 6, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: December 6, 2007 – 5:37 pm in Financial Stocks, Management Change, , , ,

Countrywide Mortgage Tricks Continue (CFC)

The subprime mortgage malaise is quite multi-faceted.  The borrowers are at fault for overextending themselves.  The lenders are at fault for making loans that are a stretch.  Realtors exacerbate the problem by artificially boosting prices.  And the builders will keep building as long as they have access to construction loans. 

Just when it seems that the mortgage madness is trying to work itself out, there was a surprise in the piles of mail this weekend: a 40-year mortgage offering from Countrywide Financial Corp. (NYSE:CFC).  It seems that the lenders are still willing to play financial games to keep loaning money.  Unfortunately this isn’t really new at all.  But it shows that at least this lender is willing to keep the games alive in overextending credit.

Back in 2006, Bankrate.com was reporting on the proposed 50-year mortgages.  Japan had or has those 100-year mortgages available so that children (and maybe Grandchildren) can buy and own property that would otherwise be unavailable.

The current 30-year and even 15-year mortgages are sort of a hoax when you consider the fact that the amortization table is almost entirely interest upfront.  On a 30-year mortgage with a 6% interest rate with a $1,798.65 monthly payment, a borrower at month 60 still owes $279,163.07 in principal.  The same 6% rate mortgage for 40-years has a $1,650.64 payment, but at month 60 the remaining principal is $289,489.78.  The 15-year mortgage with a 6% rate is much more expensive with a $2,531.57 payment but is at least a bit more skewed with the principal remaining at month 60 as $228,027.30.

The value of dirt usually appreciates through time.  But many of these newer structures built don’t seem to be built as sound as prior generations of homes.  The thought of some of these three-story toothpick structures having a 30-year life seems like a stretch.  There is no doubt that these ‘more creative mortgages’ make what would have been out of reach into something more attainable.  But that is still part of the problem. 

Maybe this is a harsh assessment here, but it really just seems that many U.S. borrowers still need to be renters rather than temporary owners.

Jon C. Ogg
October 15, 2007

Posted on: October 15, 2007 – 8:28 am in Banking, , ,

Countrywide Punished Over Quarterly SEC Filing Disclosures (CFC)

Countrywide Financial Corp. (NYSE:CFC) has filed its 10-Q quarterly report with the SEC, and the stock has gotten hammered in after-hours trading with a drop of more than 10%.  Investors should understand that many of these comments may have been included in prior filings and may have already been telegraphed by the company.  But right now in our credit crunch and liquidity squeeze Wall Street is just shooting first.  It isn’t even that they will ask questions later, because right now it’s just a status of shooting and walking away. 

Many of the pre-packaged quarterly disclosure statements and possible scenarios outlined herein sound ghastly as well, but these are frequently covered as risk factors in every filing.  After a huge down day like today, it’s no wonder that after-hours trading is being so hard on Countrywide.  After this reaction to a quarterly filing, you can bet that Countrywide’s CEO Angelo Mozilo will be on CNBC and elsewhere in media outlets Friday trying to bring about at least some calm and to state that many of these disclosures are routine (or at least somewhat) in the sector.

The company has also said that it believes the changes may hurt near-term but will ultimately help it in the long-run.  (If this was truly believed on the surface, then the shares wouldn’t be down over 10% in after-hours.)

Page 94 OFF BALANCE SHEET TRANSACTIONS
….
We do not believe that any of our off-balance sheet arrangements have had, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Our material contractual obligations were summarized and included in our 2006 Annual Report. There have been no material changes outside the ordinary course of our business in the contractual obligations as summarized in our 2006 Annual Report during the six months ended June 30, 2007.

Here are some of the comments on the next page out of the end of the SEC filing that are hitting the stock:

Read More »

Posted on: August 9, 2007 – 6:58 pm in Banking, Financial Stocks, , ,