Wednesday, July 25, 2007

Countrywide .... Genius At Work......

Why took it so long for anybody to adjust to reality ? I wonder what the buyers of these Bonds are thinking right now...

Warum es solange gedauert hat bis jemand die Realität anerkennt ist mit ein Rätsel. Das filt im besonderen für die Käufer dieser Bonds......

Countrywide conference call review october 2006
"Additionally, as previously announced, management is executing a capital optimization plan and the Board of Directors has authorized a share repurchase program of up to $2.5 billion. In connection with this program, the Company intends to repurchase $1 billion to $2 billion of its common stock in the fourth quarter financed through the issuance of high equity-content debt securities."

from May 2007!
Countrywide Financial Corporation Announces Agreement to Sell $2 Billion of Series A Floating Rate Convertible Senior Debentures Due 2037 and $2 Billion of Series B Floating Rate Convertible Senior Debentures Due 2037
Countrywide Financial will use a portion of the net proceeds from this offering to fund repurchases of up to 23 million shares of its common stock simultaneously with this offering and expects to use the remainder for general corporate purposes.
But as long the rating agency´s (taken from end of 2006) are either dumb or/and blind..... In 2007 no press release that the ratings have changed
Aber solange die Grahlshüter des Rating weiter auf beiden Augen blind sind...Die Daten sind von Ende 2006 (bisher hat es in 2007 keine Pressemitteilung über eine Änderung gegeben)
Needless to say that the management has unloaded "gazillions" of shares in the meantime.....

Überflüssig zu sagen das während der selben Zeit das Management Tonnen von Aktien auf den Marktgeschmissen hat.....

Transcript conference call via Seeking Alpha
Slide presentation conference call pdf
Countrywide Foreclosures Blog
Countrywide CEO with Cramer on Mad Money (both) prasing the stock at 38-40$

Stock just closed over 30$....

> I recommend to watch the slide show with lots of good charts

> Kann jedem die Slide Präsentation inklusiver netter Charts empfehlen

Example from the call/presentation
Let's turn to page 3. The graphs on page 3 show delinquency over a range of cumulative home price appreciation rates. For each graph, the x or horizontal axis represents the amount of cumulative home price appreciation for the first 24 months of the loan's life. The y or vertical axis for each of these charts represents the serious delinquency rate for each bucket or range of cumulative home price appreciation on the x-axis. The serious delinquency measure used here is an over-90-day delinquency using the MBA standard and expressed as a percentage of the starting count of loans.The higher the appreciation rate, the lower the serious delinquency.

> Really? They are very smart....

> Wirklich? Die haben echt was auf dem Kasten.....

The ones with more leverage, tend to have high serious delinquency rates across the spectrum of home price appreciation rates

> As i said, experts at work......

> Wie bereits gesagt, echte Experten bei der Arbeit

Odds ratio, which can be thought of as a risk multiplier.

Let's use the FICO chart on the top left of page 4 as an example. We use a FICO of 800 as a base; so we will set that FICO to a value of 1. If we look at the blue line, which represents prime first liens, we can see how the odds ratio increases as the FICO declines. A prime loan with FICOs in the low 500s is going to be over 30 times more likely to be seriously delinquent than a prime loan with an 800 FICO, holding all other variables constant.

On the bottom of page 4, we show odds ratios for documentation types with full doc being the baseline of 1. Let me explain the various doc types that we are showing here. A streamline is a streamlined refinance. Preferred is a low documentation approach offered by a number of institutions; Countrywide's is called Fast & Easy, where borrowers who meet certain criteria are allowed documentation waivers. A SIVA is a stated income verified asset program; it's sometimes called reduced doc. A NIVA is a no income verified asset program. The primary difference between SIVA and NIVA is that the borrower states but does not document their income for a SIVA loan, but neither states nor documents their income for a NIVA loan. Assets are verified for both SIVA and NIVA.

A SISA loan is a stated income stated asset; the borrower is stating but not documenting their income and assets. A NINA is a no income no asset loan; the borrower is neither stating nor documenting their income or assets. The takeaway from this chart is that documentation matters.

The less documentation, the higher the serious delinquency, all else equal.

> Shocking news......
Let's turn to page 8. Page 8 shows total delinquency for our servicing portfolio using both the MBA and OTS standards. We introduced in this topic on the last call and I wanted to spend a little more time this morning on it again. While we normally use the MBA standard for corporate purposes, many other institutions use the OTS standard. Because most mortgage loans are due on the first day of the month, there can be a large difference between the two delinquency measures; and you can see that here on this page.

Just so I can reflect on this as you people think of your questions. The other is that the Fed knowing that well over 50, 60, 70% of the loans made in 2003, '04, '05, and '06 were indexed variable-rate loans, indexed one way or another to the Fed funds rate, increased the Fed funds rate 17 times. 17 consecutive times, with most of the product out there being variable-rate product

> Translation " Fed bail us out...."

> Peinlich! So hört sich ein bitten und flehen um Hilfe der Fed an.....

Disclosure: Short KBW Mortgage Finance Index (including Countrywide)
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Blogger jmf said...

Take from Paper Money

Mozilo’s Perfect Storm

10:46 AM  
Blogger jmf said...

Mike Larson´s take

10:49 AM  
Anonymous Anonymous said...

Nomura Holdings Inc., Japan's largest securities firm,

Net income rose to 76.7 billion yen ($638 million) in the three months ended June 30 from 20.1 billion yen a year earlier, ..... The Tokyo-based company said it may exit the U.S. subprime lending industry after the business lost 31.2 billion yen in the quarter.

Nomura reduced its U.S. subprime loan portfolio to 71.1 billion yen at the end of June from 210.2 billion yen on March 31. The company buys subprime loans, packages them into securities and sells them. Demand from investors declined as loan defaults reached a 10-year high in the U.S.

``We took a hit from the subprime loan business,'' Chief Financial Officer Masafumi Nakada said at a press conference in Tokyo. ``We kept reducing our position rapidly, but the market's deterioration was faster.''

Quick and cheap exit 15-20% losses, without-incl. what are they left holding?

3:33 PM  
Blogger jmf said...


good find!

That are the same guys who bought a stake in the Fortress IPO....

9:56 PM  
Blogger said...

great blog it's wornderful.

1:09 AM  

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