Feds Knocking on Countrywide's Doors
I am not shocked at all to see the headline, "FBI probes Countrywide for possible fraud" on CNN Money this past weekend.
Countrywide's past slogan, "No one can do what Countrywide can," sure was true. They didn't become the nation's largest mortgage originator by following conservative lending guidelines.
In fact, I can recall several deals I lost in 2007 where the only reason I lost them is that Countrywide chose to either omit pertinent information regarding a property's appraisal or not accurately represent the occupancy type of the borrower.
I posted a comment about these underwriting practices back in July of 2007, "This does not surprise me as I've been first-hand witness to Countrywide making deals work by overlooking normal underwriting guidelines. Short-term "get the deal done" thinking brought on loans that never had the proper risk assessment and appropriate finance rate on them."
No wonder investors that purchased mortgage-backed securities built on Countrywide mortgage originations are getting ticked off as these portfolios experience higher defaults and delinquencies thant they anticipated.
I anticipate that this news story will continue to heat up and has not come anywhere near its crescendo. As the truth comes out, watch for the Bank of America purchase of Countrywide to falter, SEC heat to come down on CEO Angelo's Mozillo stock sales & misinformation given to shareholders and the public, and what looks more likely with every passing day, the collapse on one of the country's largest companies.
Enron. Long Term Capital Management. WorldCom. Now, Countrywide.
History sure does repeat itself!
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