Countrywide borrows money from Banks to cover loans
August 16, 2007
Countrywide announced today that it has borrowed $11.5 billion dollars from a group of banks to solve liquidity issues.
This is in response to the changing housing market. Moodys estimates
that Countrywide has enough liquidy to operate through 2008.Countrywide has also eliminated higher risk loans in favor of Fannie Mae and Freddie Mac loans.
Many have said that the real estate bubble problem or "subprime mortgage problem" as the media calls would not effect the larger lenders. Clearly as we have seen today, they are wrong, every company with an invested interest in over-priced real estate will be effected.
Still, at some point this will come to an end and companies will take their losses. Currently Countrywide is selling near it's 2003 price level. Buying houses at 2003 levels in the future isn't such a bad deal just like Countrywide is looking at it's current price levels.
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