Countrywide and Its Thrift

In May, the nation's largest home lender said its big project for the year would be to shift most of its mortgage operations from its flagship home loan unit to the thrift it bought six years ago. With the liquidity crisis spreading, the company has accelerated that plan. Following is a selection of coverage of key developments.
Countrywide to Enter Depository Business
(August 17, 2000)
In a move that could put it on a level playing field with its competitors — regardless of whether it ends up selling to a bank — Countrywide Credit Industries Inc. said Wednesday that it is entering the depository business.

The last big independent home lender said that Effinity Financial Corp., a company in which it holds a majority stake, asked the Office of the Comptroller of the Currency to approve its planned acquisition of Treasury Bank, a $111 million-asset commercial bank in Washington.

Countrywide Prepares Major Capital Shift
(May 15, 2007)
Countrywide Financial Corp.'s chief executive says that its "major initiative" this year will be moving its mortgage operations under its bank to create "a more efficient capital structure" and take "advantage of federal preemption in terms of loan originations."

The Calabasas, Calif., lender also plans to increase its sales staff by about 12% this year as it scoops up mortgage professionals displaced by the continuing market contraction, Angelo Mozilo said Monday. Last year about 74% of the company's loans were produced by its flagship unit, Countrywide Home Loans, and 26% by Countrywide Bank. By 2011, Countrywide hopes to do 80% of its loan production through the bank, he said.

A Bellwether Sends Out a New Signal
(August 13, 2007)
Countrywide has long been viewed as a bellwether for the mortgage industry by virtue of its market share, a role somewhat reinforced by its practice of actively and publicly updating its earnings outlook, albeit in a fairly wide range, for Wall Street.

So when the Calabasas, Calif., company disclosed that it could not reliably quantify how conditions in the secondary market would affect its operations, away went one of the few remaining points of clarity in the mortgage arena. At the same time, the company's response to the credit markets' worsening conditions — expediting a plan to move its home lending operations to its thrift — reinforced the shift in mortgage lending back to companies whose balance sheets include traditional bank sources of funding.

Countrywide: Street Mulls Worst Cases
(August 16, 2007)
It may well have been included as a pro forma, worst-case scenario in an analyst's report, but the mere use of the "b" word in relation to Countrywide Financial Corp. was a needle-mover in terms of market psychology.

"If enough financial pressure is placed on Countrywide, or if the market loses confidence in its ability to function properly, then the model can break, leading to an effective insolvency," Kenneth Bruce, a Merrill Lynch & Co. Inc. analyst, wrote in a report issued Wednesday. "If liquidations occur in a weak market, then it is possible" for Countrywide "to go bankrupt."

For Countrywide, Future Is All About Right Now
(August 17, 2007)
Countrywide Financial Corp. is now trying to pull off in a matter of weeks a transformation it once said would take years.

The nation's top home lender said Thursday that it will be funding "nearly all" its production through its thrift subsidiary by the end of next month. The Calabasas, Calif., company also said that from now on 90% of the loans it makes will meet the thrift's investment criteria or will be eligible for sale to the government-sponsored enterprises. Already the thrift is funding 70% of Countrywide's production, David Sambol, the parent's president and chief operating officer, said in a press release.