Merrill Lynch Analyst Kenneth Bruce suggests that Countrywide Financial could be headed toward a Chapter 11 filing. “Effective insolvency,” he says, could result if Countrywide is forced by creditors to sell assets at barn sale prices, or if investors lose confidence in Countrywide’s cash-raising abiility. Bruce has also downgraded Countrywide from a buy to a sell– which Countrywide CEO Anthony Mozillo has been doing on an ongoing basis for some time.
This breaking report was filed by Dean Foust with Business Week’s Hot Property Blog. And as for Mozilo gathering nearly $1.3 million recently from exercising 92,000 options, Faust has a few choice words:
“I’m sorry, but it doesn’t pass the smell test with me that Mozilo has been selling shares on the way. Call me old-fashioned, but I’m from the school that says the captain goes down with the ship, and even takes the bullet, like the captain of the Titanic. And he doesn’t profit while shareholders are losing money.”
I’m sure many shareholders would agree.
This would also explain why so many of the San Diego short sales we help resolve involve Countrywide mortgages. Fortunately, though, Countrywide was one of the first lenders in San Diego to aggressively staff and train a large loss mitigation department. And the way things have been going lately, they are probably the busiest unit in all of Countrywide Financial.
2010 Postmortem: Countrywide Financial went bankrupt; Bank of America absorbed their mortgages including a lot of toxic debt. The fallout since 2007 has been horrendous–with an untold number of short sales and foreclosures in San Diego County.