The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Smiling Bob who wrote (91804)	10/11/2007 2:30:48 PM
From: Think4Yourself	Read Replies (2) of 306849

Let's say foreclosures triple, an incredibly pessimistic jump from the record current rates, to 4.81% Let's further assume they directly own all the loans they are servicing, and that none of them are GSE insured. Both of these assumptions are wrong but what the heck! What effect do you see a temporary 4.8% default rate having on Countrywide? will this bankrupt them, cost them a few quarters of losses, or just subtract from earnings they make on fees related to the foreclosures and all the mortgages they are still underwriting and selling to the GSE's? One factor working against Countrywide is that their loan rates are not competitive at the moment. Homebuyers would have to be fools to borrow from them so they should still be doing a lot of business. One interesting aspect is that new mortgages are being written at higher interest rates than recent years. FWIW our mortgage is serviced by Countrywide and is GSE guaranteed. One in every six mortgages is serviced by Countrywide, and in a year or two it will be one in five as their competitors continue going bankrupt.

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