Mike Mueller, Social Media.ist

Hope you get the job!

Well, I might as well apply there too...you think they hire all in ones? (re agent, loan officer) hey....I can even do an appraisal or two. Do I need a license for that?

I read...I ignore...I just do what I do. Hey...can I pull that string and help you talk?

Mike,

Thanks for posting this. I read Nimas post and Brians post but had not read Tony's nor your first one on the subject. I also highly respect Nima. This is a very unfortunate situation for all and things like this only add fuel to the fire.

Lorna -  Wouldn't that be something?  I think I might have to turn them down.

Sally - Maybe they could hire an Army of Managers.  I did see a post where the same department they shut down also had a "Hiring" notice up on one of the job boards.

Karen - I can't tell you how many really good LO's are Countrywide.  This isn't about them - it's about their company.  Nima?  Two Thumbs Up!

 

Hey...bunch of Army guys I know are retiring  lol!  In any case Mike, I will stick to the trustworthy and stable ones I know. Brokers who can submit files to a couple of lenders ....just in case..

Mike... I have so much to say and said some of this in a post yesterday. Part 1.....  I agree, all of this hype and rah rah is starting to make me sick. I wish those at CW the best of luck. But can't you see the writing on the wall? Especially when they are sending message after message to their employees, twisting the facts around, making it sound like all will be good on the front. Did you see their latest commercial?  I guess my mouth and my direct honesty sometimes makes me sound bad or look bad. I don't wish anything bad on anyone. I love those that are loyal to their companies. But think on your own two feet and don't have the company do it for you. Listen to other experts and not just your company. This is just my opinion and .02.

Sally - You've got it. "Just in Case"

Jeff - Some companies are better at certain things than other companies.  Perhaps it's the PR department that is really to blame?  I know there are some absolutely wonderful LOs at Countrywide.  Overall I am somewhat disappointed at the enthusiasm of some in spreading the corporate message without taking the time to digest it and put it in their own words at the very least.  I wouldn't expect to see them bash their own company.  That's not loyalty.  

Wow Mike, a bit harsh don't you think?  To categorize the Countrywide management team as kool-aid drinking, non-thinking, non-questioning corporate robots is a gross generalization that doesn't reflect the truth or your ususal even-handed approach. 

Wendy -

It is a gross generalization.  That's very true.  It might be a little harsh.  True too. 

I'm not on the "Bash Everything Countrywide" wagon.  I want CW to stay afloat, to prosper.  As I said to Jeff above, "I know there are some absolutely wonderful LOs at Countrywide.  Overall I am somewhat disappointed at the enthusiasm of some in spreading the corporate message without taking the time to digest it and put it in their own words at the very least".  

I wouldn't expect you to bash CW.  I also would be very surprised to see your name at the bottom of "the email" without at least rewriting it in your own words.  You are a highly regarded LO in this community.

To direct a manager to deliver the same exact message into local real estate offices, combined with the spam email that's being distributed - smacks of Kool aid.  But that's just my opinion.

Wendy - (continued) ...

In Angelo's TV appearance today he made note that the two CW mortgage and CW Bank were different and so they couldn't go to the Fed Discount Window.  Hence the BofA deal.  In reading the  CNBC article,

"The manager told the realtors that the existence of Countrywide Bank makes a huge difference because now they can borrow from the government and, therefore always be able to fund their loans."

And to have that manager also say...

"He also told the realtors, "Don't rely on mortgage brokers because their sources may pull the funding or go under at the last minute, and you lose a sale."

That was the hot button for me. 

 

 

 

I do love discourse, so let's break it down.  How many loan officers in the industry really understand how money flows through the mortgage market and subsequently understand what happened in the non-GSE Secondary market? 

Should so many hedge funds have placed sub-prime loans in their mezzanine level of risk versus appropriately lower?  Did Countrywide underestimate the impact of the flattening real estate market before the secondary market liquidity squeeze?  How many loan officers actually know the percentage of closed production their company sells to the GSE's (Fannie Mae, Freddie Mac and Ginnie Mae) that aren't impacted by the liquidity squeeze?  (we could go on and on and on........)  How many loan officers could explain the complexity of the market coherently?   I think we can probably agree that loan officers who are "students of the game" are the exception, not the rule.  

But the reality is even if they ARE students of the game, realtors and customers didn't really want that much detail (after fielding hundreds of phone calls, I can state this unequivocably). Fear begets fear and can create a self-fulfilling prophecy.  Although it would have been great to have the time to provide education, the PR "talking points" filled an immediate need for those loan officers who didn't know what else to say.  Kool-aid by your definition; Loan officers faced with a situation they don't understand and grateful for something to say by mine.  Let's face it, if the industry was filled with only educated loan officers with inquiring minds, the desire to look beyond the surface and conduct research, the loan officer population would be less by 80%........and that isn't limited to Countrywide.

My bottom line "talking point" was simple.  We will continue funding your transactions. Worse case, trading at 70% of book value we will be purchased in part or in whole - in which case we will continue funding your transactions.  I am looking more intelligent than I deserve right now. 

Wendy - I'm with Mike in that I'm not wishing ill will to CFC and most especially the employees of CFC. I want to stress this is not a bashing session regarding the employees of CFC. In fact,  both Mike and I have several good friends that work at CFC. From talking to my CFC friends, they are admittedly concerned and have personally told me they feel intellectually uncomfortable extolling what they call "corporate propaganda" and "half truths."  

And yes, I have a pretty good grasp of everything you spelled out above (I would be very happy to discuss and go over my background if you call me).

Bottom line, CFC is experiencing tremendous difficulties and the PR machine is working overtime maneuvering the smoke and mirrors of reality. Just this week, Countrywide Bank started offering CD yields far in excess of their nearest competitor. I would take the time to read a post Dan Green made yesterday titled:

Professor J. Randall Woolridge Warned Me About This In Penn State Finance Classes

In it he states:

"What does it say when Countrywide offers a CD yield a half-percent higher than everyone else? 

And then brags about it!

To me, it says that Countrywide is desperate to borrow funds from as many channels as possible and that the company's problems may be deeper than believed.

The company stock is off 42% in the last month, it's tapped an $11.5 billion line of credit recently, and layoff notices began circulating Friday.

And then the story takes an interesting twist when we consider that its CDs are priced so far out of the market. 

Remember: Certificates of Deposit offer an interesting debt opportunity to Countrywide because each "deposit" is FDIC-insured for up to $100,000. 

In other words, even if Countrywide defaults on its CDs, the holders of the CDs stand to lose nothing except the opportunity cost of giving their dollars to the Calabasas-based lender.  The FDIC (i.e. U.S. taxpayers) will replace their "lost" principal balance.

This is a clear case of Moral Hazard if I've ever heard one.  By paying a half-percent more than every other bank on Fidelity's Web site, Countrywide appears to be taking on risk for which they won't be responsible if the company fails.

And this is what Professor Woolridge told us.  Sometimes the bank with the highest yield is the bank with the biggest troubles.

In Countrywide's case, he may have been right again."

Additionally, in 2005 Angelo Mozilo stated the Countrywide business model was set-up for a business environment of high liquidity, appreciating real estate prices and high profit non-agency niche loan products. With the performance decreasing real estate prices coupled with the issues occurring in the non-agency and non-prime 2006 trances and vintages, CFC's problems run deeper than they are admitting.

That is one of the reasons CFC has shifted its focus to agency paper and running it through the bank. The bank in return is running fire sales on money, the Fed helped by opening the overnight term from 1 day to 30 days  while lowering the discount rate by 50 bps. That, along with the $11.5 billion of high cost money they just borrowed coupled with the $billion dollar pool they could not sell indicates major liquidity problems.

Will CFC go bankrupt or cease operation...any thinking person hopes not. My thoughts are they will be a much smaller company or acquired 12 months from now. We have to wait and see and only time will tell.

To end, I most worry about the CFC employees and their familes and only wish the best for them. Sometimes, the best thing to do is to admit their company is having a problem and think about themselves first and not CFC.

 

Hi Tony,  I think you missed my point.  I have watched AR posts and the press bash Countrywide with almost religious fervor for weeks.  While I could have joined the debate with a number of links as well as references to my financial background, college background and personal research (proving that I am not mindless and earning AR points at the same time), I only chose to speak up when I saw Countrywide employees unfairly characterized and painted with a very generalized stroke.  I think highly of Mike's blogs but felt this one moved Countrywide-bashing from a business debate to a personal level and it shouldn't happen unchecked. 

Wow!  Those are some heavy comments. 

Wendy - I think you initially had a problem with the gross generalization and my characterizing employees of CW as mindless, unthinking bots.  My post was sarcastic in nature and reflected my personal dissatisfaction with "the message" as it was being delivered.  I in no way was inferring that all CW employees are mindless in any way.  I also wanted to make the distinction that my beef is with the message and it's delivery.  I have stayed out of the "Mozilo is a crook vs. Mozilo is a God" debates. 

I would have stayed clear of this propaganda issue as well, and I had.  I've deleted the emails from CW reps and moved on.  I've seen the same in post version here again and again.  I moved along without comment.  I saw Nima's post when he first posted and kept moving on.  I happened to be reading the comments the other day and as I have mentioned, he had 25 comments all wishing him the best of luck and thanking him for such an insightful post.  I would have let that go too.  Then Tony crafted a well thought out rebuttal as a comment.  Shortly thereafter the comment stream turned ugly.  Nima is well respected here and to his credit he stayed clear.  However, for fear of the post being deleted, and with it the comment too, I reposted Tony's comment.

I would have left it at that.  Then, a friend directed me to the CNBC article.  I might have skimmed past it as well if it wasn't for the attack on Brokers.  That did strike a "personal" chord in me.  So perhaps there is something to that.

To be perfectly fair I have also seen a couple of IndyMac, Wells Fargo, Homecomings, and other corporate "We're still here" emails from reps, not with the fervor and repetition as CW. 

If I have offended you personally, I am sorry.  It was never my intention and I can honestly say you are very highly regarded as a loan officer and a human being. 

 

 

 

Mike, never fear.  You did not offend me nor was I angling for the compliments.  My response was to Tony who I felt used my defense of my associates as another opportunity to bash Countrywide.  

Wow... wow... wow..  this has been one of the better conversations in many weeks.... 

Wendy, this is the first that I have ever see of you.  Hello and welcome.  Let's put everything aside just for one moment.

Here is my opinion from knowing of Mike, his opinions, and his blogs... and knowing Tony based on the same, but also from talking to him on the phone several times. And this these are my feelings also. We aren't try to bash Countrywide, but I....and I hope I am not putting words in Mike's and Tony's mouth. if I am wrong, please tell me here.  But we....  have a problem with many of the CW loan officers and now branch managers putting out memos that are generic. I have been in this industry for 15 years. I am tired from a lot of back and forth on the phone today with 3 purchase transactions and 2 that have two close next week.

 So.... I hope what I am saying makes sense.....  I think, in all honesty, it's a slap in the face to not only those in the industry, but to CW loan officers that sound as knowledgeable as yourself. I know a few CW loan officers that are very knowledgeable, good at what they do, and can explain most of what you and Tony are talking about. Please, check out two posts that I wrote on 8/07 The Explanation of Mortgages & on 8/21 titled Shop shop, tisk, tisk....  I didn't want to include the links because some people think this is spam. But please let me know what you think of them, especially the first one.

Overall....   it sounds like the 4 of us have a combined 60 years in this business. Less than 20% know how mortgages operate. Most know that if they work for a company such as CW, Wells Fargo, Bank of America, etc etc, that they service their loan. They don't know that most of these loans are still broken up per se and sold on the secondary market. This is a big problem because I know a few loan officers that work for CW and think that they are number 1, the biggest and best because they have the best product and 13% of all loans are done by CW. Not realizing that 60% of CW's business is outside the retail division. There are two many on the loan officer level that could explain this. I think might mentioned it....ignorance. Thumping the chest with memos that are from corporate and not stating this. Hey... that even pissed me off. If I had worked for CW and I had a copy... I would have placed it in a blog and then explained it. Some people put it in a blog and made it sound like they wrote it. This is what irked so many of us, hence the reason why you are seeing so many semi Countrywide bashing posts. A lot of us are tired of hearing the PR and propaganda that they are okay. They aren't..... the writing is on the wall. And everything that Tony mentioned is right on.

Now, I am not taking anything away from you. As I have told so many, I also don't want to see anything happen to families of CW.... but they better stop reading these and listening that everything is okay. In more likely hood, they are going to be shell shocked in 6 months.

In any case... Mike, sorry for the long winded comment. I am now rambling.... but it's educating the consumer that I am all about. I am not perfect nor god... but how everyone has been putting this out to the public, in my opinion, is deceiving and misleading.   Loyalty?  I LOVE loyalty and respect it. But use common sense also. If you can't show me this, then I start to lose respect for that person. Defending your company is one thing, not admitting is like blaming a missed commitment date on your dog. 

Lastly....  Mozilo got greedy 3 years ago...  and took risks... he should have left the Pay Option Arms to other players... I wrote this in my 2nd post ...the shop, shop one.  And now sells a lot of stock 6 months before all of this comes out. You don't think he had an idea?   Again, just my .02.

Wendy - I'm sorry if I offended you, that was not my intent...for that I apologize! I also want to stress, i'm not bashing CFC employees as several of my very close friends are employed by CFC. In reality, my attention and concern is for them. It breaks my heart that they could be negatively touched by the financial difficulties CFC is experiencing. While the good LO's can easily get a job at a competitor, I worry about the others that are on the fulfillment and support side of the business.

Jeff and Mike are both right on regarding my intentions.

What are your thoughts regarding the additional $2 billion BofA injected into CFC yesterday?

Again, I sincerely apologize if I offended you, that was not my intent.

Mike, Tony and Jeff, I am starting to get a real kick out of you guys!  I am not personally offended but I did get my back up for my associates.  I have seven brothers and learned from them how to play hardball and then, when done, slap each other on the butt and go out for a beer. 

What amazes me from an educated group like yourselves is that the big picture seems to have been lost.  This liquidity issues are not Countrywide's alone - it is an industry crisis.  It is more than an industry crisis - it is a financial markets crisis.  Set aside all the comments and opinons about Countrywide and take a look at Thornburg - the AAA Investment Grade, no sub prime, no Alt A, Jumbo player - Goldstone continues to state that the financial markets are still not functioning and they, too, have been forced to take drastic measures to survive.  At the same time, over 100 mortgage companies have failed. In the general market, numerous mergers and acquisitions are falling apart due to the complete inability to get commercial paper.

Contrary to popular opinion, we at Countrywide are not blindly loyal.  We agree that not all loan officers understand what is happening in the market, but those of us who do - and know how to independently research the facts behind the P.R. and the Press - CHOOSE to stay at Countrywide.  Jeff, you state that we "are going to be shellshocked in 6 months" as though that risk is for Countrywide employees alone.   Are you kidding me?  The entire industry, including the mortgage servicers backed by money center banks, is going through drastic and rapid changes and there is potential for shellshock across the board.

Tony, the BofA injection was no surprise at all.  B of A has expressed interest in CW in the past and I fully expected them to utilize the fact that we were trading at 70% of book value.

 

Wendy - Agree with you about BofA interest in CFC...good shot CFC employees could be wearing BofA shirts next year. The biggest concern I have for the CFC employees are:

1. Huge cultural differences (BofA is a bank that happens to do mortgage banking)
2. Elimination of redundancy in support, fulfillment and management positions.

Here are some of the concerns my CFC friends voiced to me. BofA is entrenched in Charlotte and they prefer having their support services located in the Southeast (costs and business climate). Believe the impact would be tremendous for SoCal operations. Most likely Plano will be fine for the most part. Additionally, BofA doesn't have the best history with with efficiently encapsulating acquired or merged companies. BofA does not want Mozilo involved...that's will killed the deal before.

Most of the analyst also believe the book value is overstated in light of recent mortgage market. The figures I have seen floated are the corrected book value should be 20-35% lower that is current stated. That's probably why BofA stipulated option to purchase CFC stock at lower value.

Wendy...  I will say this....  when I made that statement, it was a general statement. And I even told you that you seem different. But if you talk to most Countrywide loan reps., their heads are in the clouds based on what was sent down to them in a memo. 

I will try to find you a post that was written 1 week ago and 3 to 4 CW loan officer's jumped in, jumped on me, and claimed that things were great and repeated the memo. That is the problem that I have with this whole thing. Not you, not Countrywide, and not the employees of CW. But those spreading the word like gospel, based on memos from corporate. Again, loyalty is one thing, but common sense is another.

On the note of 11.5 billion borrowed and now another 2 million. Not too many of us even know the terms.  What else is it costing CW other than an interest rate? Many of us know that this is just a band aid on a cut that is not just skin deep. This is my argument. Would you agree or disagree?

Other than that, we could talk about financial backgrounds all you want. You have me beat on that. I just have the hard knocks school of originations of 15 years. They don't teach some of this in school. 

About the big picture being lost. I am writing a post on this and it will be out tomorrow. There is fear in the market. The Fed cut was not just for Countrywide as so many have said.... it was for the market and to make buyers feel comfortable, positive. 

Anyhooo.......  

Hi Tony, 

It may be true that B of A didn't want Mozilo (I am not privy to B of A Sr. Mgmt so I can't confirm or deny) but I do know that for a sale of that nature to go through, CW Board of Directors would have to vote to remove a significant "poison pill".  They chose not to.  Market conditions and Angelo's retirement could change that overnight.

Huge cultural differences.....absolutely, although give what is happening in the market right now, everyone is looking more "bankish" by the day.

I do know that one of the reasons B of A has been interested in CW is that our integrated delivery system from Origination to Secondary is second to none (at least in retail) and a significant portion of that system is located in good 'ol S. CA.   That being said, they wouldn't be the first bank to purchase a company and tear apart the very fabric that made them worth purchasing in the first place.  The Wells Fargo purchase of Norwest comes quickly to mind.  Somewhere in the mix the value and contribution of the people behind the systems seems to get lost.

The part that just doesn't fit in the big picture yet is that B of A appears not to be overly fond of the the correspondent and wholesale part of the mortgage business.  They reiterated this recently.  Given the volume that is driven to Countrywide from those sources,  the cost-benefit ratio would change dramatically if those production channels are limited or removed - even at a bargain stock price (whatever you deem that to be).

Jeff,

Some of the best and brightest in the industry graduated from the school of hard knocks.  Self taught is often better and more permanent than hand fed to pass a test.

To your point........the liquidity freeze in the Secondary Market is a serious wound.  Bandaids are being applied throughout the entire financial sector.  Thornburg practically had to cut off a limb and then apply a tourniquet!  I would not be so silly as to purport that CW hasn't been dealing with some difficult challenges....just that those challenges are not faced by CW alone and are not due to CW "greed".

 

I admit it. I don't read these e-mails. They get automatically added to the junk senders list, never to be seen again. I hate spam! =)

I'm not a LO but a REALTOR® who has been in business a long time.. I have seen a number of lenders come and go and I'm betting CW will be gone as a name within a year if not 6 months.  Mozilo is making the right sounds right now but he knows the company is in trouble.  My prediction is that there will be a lot of ink about this when BofA takes over and Mozilo's part in it when the dust settles.

It will be interesting what the mortgage landscape will look like this time next year. We can all sit back and make predictions, however only time will tell. The rest of 2007 promises to be full of new twist.