Countrywide Financial crisis looks serious by Nina Gotzmannova

Countrywide Financial Corp. announced on Thursday really unpleasant news. The nation's largest mortgage lender has some fundings problems. Their mortgage fundings for last month fell 44 percent comparing with a year ago. The company offers two types of mortgages. First one is mortgage loans, packing for sale to large investors. They are called mortgage backed securities, they are paid for longer time and the monthly payment can be easily changed, so it's not predictable the monthly cash flow. The second type, non-conforming mortgages, must be sold in the secondary market to private investors. In August 2007 secondary market stopped the sales of most of these second type loans. It was a big bang for Countrywide, because at this time the company had issued about a fifth of all mortgages in United States. Countrywide was at potential bankruptcy risk. As a result of the collapse of the secondary market Countrywide is firing people, almost 5000 people lost their jobs and another 7000 is waiting for their final day at work. According to analysts the company may fire even more people, up to 40 percent, which mean another 12,000 people. In stock market is the situation almost the same. On Thursday the shares of the company fell 52 cents, which is almost 3 percents. The company was founded in 1969 and its revenue in 2006 was more than $ 13 billion. The company has been described as the "23,000% stock", because from 1982 to 2003 Countrywide delivered investors a 23.000% return. The happy days are probably over…

related story: http://news.yahoo.com/s/ap/20071011/ap_on_bi_ge/countrywide_mortgages;_ylt=AvMsCjJ9YKXeBSHg7W4hb3Ss0NUE

by Nina Gotzmannova for PocketNews (http://pocketnews.tv)

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