The beleaguered Countrywide Financial is expected to shift its production into mostly GSE and government-backed loans as the secondary market’s liquidity crisis worsens, according to a new report issued by Credit Suisse.
Countrywide is both the nation’s largest overall residential funder, and the biggest subprime originator as well with a market share of 8.87%.
The Credit Suisse report says the lender will shift “its origination mix towards predominantly government sponsored enterprise (GSE) eligible paper, which solidifies its ability to sell its production. Clearly, origination volumes should decline dramatically in the present environment.” Credit Suise analyst Moshe Orenbuch notes that Countrywide has now tapped an $11.5 billion credit facility, 70% of which has an existing term greater than four years. He writes that the short-term financing market “has virtually shut down.”
In response to Countrywide’s liquidity problems, Fitch Ratings downgraded the company’s long-term issuer default rating from A to BBB-plus, citing “the unprecedented disruption in the capital markets.” Moody’s Investors Service downgraded the senior debt ratings of Countrywide and its parent company, Countrywide Financial Corp., from A3 to Baa3 and the rating on deposits of Countrywide Bank FSB from A2 to Baa1.
Tags: Countrywide Financial, Government Sponsored Enterprise (GSE), Lenders With Problems 2007, Mortgage Bubble, Mortgage Defaults, Mortgage Delinquencies, Mortgage Implosion, Mortgage News, Subprime Implosion, Subprime Mortgage, Subprime Mortgage Industry
