Fancy Financiers

“We are experiencing home price depreciation almost like never before, with the exception of the Great Depression.” So says Countrywide Financial CEO Angelo Mozilo.

That’s a pretty bold statement, Mo. You peaked my interest and I wanted to hear more. In a recent article “Countrywide Financial has dire warning: The giant lender says debt mess may worsen,” the Associated Press reports “…Countrywide said credit quality among its prime borrowers – clients with solid credit ratings – has drastically worsened. At the end of June, 3.7 percent of Countrywide’s prime home-equity borrowers were not up to date with their payments, compared with 1.5 percent at the end of the second quarter last year.” This is pretty interesting stuff. I was curious to see what the lender was messaging to borrowers in this regard.

On Countrywide’s website, designed primarily as a marketing outlet for the company’s loan products, Mo talks positively about a campaign to fund home loans to minorities and borrowers in lower-income communities. He states “[a]s a mortgage lender, we are determined to play a critical role in ensuring that the dream of homeownership is attainable to everyone. Homeownership creates wealth and enables individuals and families to prosper, while playing a vital role in the health of our country’s economy.”

What about all those sub-prime borrowers who are in a heap of trouble right now? I doubt they would tell anyone they are feeling wealthy or prosperous. I don’t get the idea that driving more speculative loans which have little chance of being picked-up on the secondary market makes sense. I am also leary of any campaign that seeks to profit from targeting minorities. You all know I have a background in affordable housing and there are lots of good programs for low income homebuyers, often combining public and private resources in a way that educates and prepares families for the realities of homeownership and builds in safeguards to help avoid financial reversal. I would much rather see Mo and team dedicate their charitable efforts through contributions to inclusionary zoning or partnering with non-profit developers in subsidising loans for first time homebuyers. I don’t like Countrywide’s dispartity in messaging to investors and borrowers. It gives me the heeby geebies.