I promised myself that I would not blog while on my final summer vacation, but anyone with a BlackBerry knows, there's no such thing as vacation anymore.
Earlier this week I got an email from a realtor I know in a mid-sized market in the Southeast (he asked that I not identify him or his city). The market is still doing pretty well, despite the slowdown in housing nationally because it has a strong local economy that is in a growth spurt. The realtor wrote to tell me that a branch manager from Countrywide Financial was coming to his offices to talk about the overall credit market and Countrywide's credit issues in particular.
Via a lengthy email at first, the manager said he was going to give them the "real story, not the misinformation the press is putting out." He also said in the email, according to the realtor, that "borrowing billions of dollars is no sign of a problem."
So the realtor wrote me back last night, to tell me all about the visit. The Countrywide presentation was by the branch manager with all three local loan officers present. The realtor is in one of the larger firms in town, which has worked closely with Countrywide over the past year, hence, the realtor feels, the personal attention.
"The emphasis was on their stability as a lender," wrote the realtor. "They said things like, our clients could count on them to be around at the point of final funding and that we as agents could count on them to give sound advice and be 'our partners' for years to come."
The Countrywide manager noted that the company has been profitable for 100 straight quarters (I don't know if that's true) and are probably the most profitable lender in the country (which of course doesn't say much this year).
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. The 11.5 billion dollar loan, according to the manager, was just a temporary move until the bank was "in a position to handle everything." He said they have 14 months cash on hand. The manager also noted, "many of our competitors will be out of business soon," the Realtor writes, "so don't rely on anyone unless they have extensive experience and primarily lend their own money."
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." The manager said they were excluding many mortgage brokers from several of their programs because Countrywide wants more control.
The manager said the closing of "Full Spectrum," Countrywide's division handling subprime was a decision that was made three months ago, long before "this crisis hit two weeks ago." The manager added that Countrywide just last week hired 670 loan officers. They are focusing more on FHA, VHDA and VA loans. He added that PMI will become more prevalent, "which is good for the economy because it will allow us to lend more and good for the borrowers because they'll get a home."
The manager predicted that the subprime crisis and aftershocks will continue for 6-18 months, "depending on the overall economy, peoples' ability to either sell at a high enough price to avoid defaulting or maintaining good enough jobs to do the same." There was no answer to the question: "Is Countrywide going to offer a bailout program for its clients in trouble?" The manager suggested maybe the government needs to step in, and raise the FHA limit above $417K.
And that was the end of the realtor's email. I have to say I'm not surprised Countrywide would be out there trying to talk up the local real estate agents and make them feel like everything at the company is A-O-K. I'm just not sure that I buy everything the "manager" was selling. For the largest subprime lender to say that they "decided" to cancel their big subprime lending program months ago, and not as a reaction to the company's need to save itself with an 11.5 billion dollar loan, is a bit of a stretch.
And I surely don't think the need to borrow that much money is "no sign of a problem." I'm guessing the realtors don't think so either, given that, according to the realtor who wrote, only about 5% of the agents in the company even showed up for the Countrywide presentation.
Back to the beach...
Questions? Comments? RealtyCheck@cnbc.com