Countrywide’s Tin Cup

Countrywide Financial, the nation’s largest mortgage lender, was forced to tap a credit facility for $11.5 billion to fund new loans and bolster liquidity.

With the secondary market for mortgage back securities in lock down and largely no longer available for firms like Countrywide to finance mortgage originations, the company took a dramatic and very telling move when it completely drew down an available line of credit to meet current liquidity needs.

The stock, off nearly 13% Wednesday and over 50% since the beginning of the year, was quoted lower by another 11% at $19 in Thursday’s premarket trading.

Countrywide also issued a statement saying, due to a tightening lending standard internally, 90% of future mortgage originations will be eligible for purchase and backing by government sponsored entities Fannie Mae and Freddie Mac.

This entry was posted on Thursday, August 16th, 2007 at 12:55 pm and is filed under Crashing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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