An amazing conference call with Countrywide Financial (CFC), the largest US mortgage underwriter. It was beyond ugly. Here are some notable quotables from Chief Executive Angelo Mozilo:
– "During the quarter, softening home prices continued to affect many
areas of the country, and delinquencies and defaults continued to rise
across all mortgage product categories as a result."
-Delinquencies and defaults rising across all investment tools.
prices may effect credit.
-S&P Case-Schiller is strong tracking tool
for health of housing market
[Editor: we have referenced this many times]
-CFC continues to study further
tightening of loan standards for both subprime and prime
-CEO believes markets will force the weaker
mortgage companies to either work with bigger players or look elsewhere for
-For a Fed Governor to
say that the lending group had this coming is unbelievable.
The WTF line that I don’t get is this one:
"no one saw the
deterioration of real estate values coming."
Here comes the money shot:
"Company is seeing home price
depreciation at levels not seen since the Great Depression"
–Previously, the company had stated they expected a
turnaround in mid-2008; now, they say they are not sure when housing
declines will cease. Refuse to rule out house price declines in 2009;
-Surprising comment regarding the prime portfolio: so far what they have seen in deliquencies is
due to people losing job, losing health, lost marriage, more so than any resets. Stated that the "definition of prime may not be as high as some people think."
-Expects to hear
mergers and people going out of business in the near future;
-The company cut its 2007 earnings forecast to a range of $2.70 to $3.30 a share, down from previously lowered guidance of $3.50 to $4.30 range (projected in April). In the beginning of the year, the company said it expected to earn $3.80 to $4.80 a share.
All told, a simply brutal and market moving nearly 3 hour conference call . . .
Thanks to Briefing.com for the update