Wednesday, September 5, 2007

Countrywide saw real estate market collapse coming, says Dallas-based MortgageDaily.com

By Pegasus News wire

DALLAS — According to a conference call made a year and a half ago, Countrywide Financial Corp. foresaw the demise of companies like Ameriquest Mortgage Co., which is closing down, and bankrupt New Century Financial Corp., says Dallas-based mortgage market watch website MortgageDaily.com.

Commenting on the low subprime margins in the call, which was reviewed in February 2006, Countrywide said, "It's the Ameriquests and New Centuries of the world" as well as "companies that have a REIT."

Photo not provided by Countrywide, Mortgagedaily.com

Too bad no one listens to massive multinational corporations anymore

"They're dumping the losses into the REIT and then securitizing the stuff they have a profit in," Countrywide continued. "No question the key players there [were] Ameriquest and New Century."

In what turned out to be quite an understatement, Countrywide, which got a $2 billion capital boost from Bank of America last month, forecasted some consolidation would take place later in 2006, with "the weaker ones folding."

New Century filed for voluntary chapter 11 bankruptcy protection on April 2 and subsequently liquidated. ACC Capital Holdings, the parent of Ameriquest, sold wholesale subsidiary Argent Mortgage Co. to Citi on Saturday, Citi announced. An ACC spokesman confirmed that Ameriquest would shut down.

Other subprime operators struggling to remain viable include Option One Mortgage Corp., whose parent company reported in an earnings announcement last week that it is trying to speed the sale of the subprime lender by possibly winding down the origination business and selling just the servicing platform.

Accredited Home Lenders Holding Co. has temporarily halted all new business and is in litigation trying to force Lone Star Fund V, L.P., to acquire it at more than $15 per share. Without the merger, Accredited's survival is in doubt.

Founded in 1998, MortgageDaily.com is the dominant online news source for the mortgage industry. Around one million mortgage business news pages are viewed monthly at MortgageDaily.com and its affiliate publications.

Source: Mortgagedaily.com

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