Countrywide Financial Corp. reacted to the crumbling confidence in the mortgage lender in some quarters by drawing down all of an $11.5-billion credit facility and accelerating plans to move its mortgage business to Countrywide Bank FSB.
David Sambol, president and CEO of the Calabasas. Calif.-based financial services concern, issued a five-paragraph statement describing the $11.5 billion in unsecured credit available to Countrywide Financial through a 40-bank global syndicate. “In response to widely-reported market conditions, Countrywide has elected to draw upon this entire facility to supplement its funding liquidity position,” he wrote. “Over 70 percent of this facility has an existing term greater than four years and the remainder has a term of at least 365 days.”
The credit facility has been part of the company’s “liquidity management framework,” according to the statement, and has “focused on maintaining a diverse, multi-layered assortment of financing alternatives.”
Most recently, as widely reported this week, a Merrill Lynch analyst shifted his brand new “buy” rating on Countrywide stock to a “sell,” and discussed at length the possibility of Countrywide being forced to file for bankruptcy. Countrywide hadn’t commented on that occurrence.
In today’s statement, Countrywide CEO Sambo noted that “secondary market demand for non-agency mortgage-backed securities has been disrupted in recent weeks,” and that reduced liquidity in the secondary market had been exacerbated because “funding liquidity for the mortgage industry has also become constrained.”
He wrote: “Countrywide has taken decisive steps which we believe will address the challenges arising in this environment and enable the Company to meet its funding needs and continue growing its franchise. Importantly, in addition to the significant liquidity which we have accessed from our bank lines, the company’s primary strategy going forward is to fund its production through Countrywide Bank FSB. We are already originating in excess of 70 percent of our total origination volume through the Bank, and expect to accelerate our strategy so that nearly all of our volume will be originated in our Bank by the end of September.”