Comments by Countrywide's Angelo Mozilo take stocks down sharply
Yesterday, Countrywide Financial Corp. (CFC), the largest US mortgage lender, reported 2nd quarter earnings declined and the company reduced its 2007 forecast as a growing number of consumers fell behind on home-equity loan payments. A provision for higher loan losses and lowered guidance combined with comments during the conference call by Chairman and CEO Angelo Mozilo really spooked the market causing the Dow to drop over 200 points, its largest lost since March.
Today, as of 1PM, the Dow was up 15 points and the 10 year Treasury Bond, the basis for mortgage rates was higher at 4.90%. The trend in Treasuries has been postive of late forecasting lower mortgage rates near term.
Highlights:
On the current real estate environment: “I'll just wait, because I'll be able to buy the house cheaper tomorrow than I can today. And that psychology has to change, and the only thing that's going to change it is supply.”
On when the market will turn around: “I say 2009 because my experience is it just takes a long time to turn a battleship around. And this is a huge battleship, and it's headed in the wrong direction. So first we have to get it to slow down, then stop, and then turn.”
On his outlook: “My feeling is by that time … very substantial pent up demand, because of all the people that have been closed out of housing, probably lower interest rates ... 2009, 2010, 2011, I look to as sort of like 2003, 2004 and 2005 -- great years for the industry.”
On delinquencies: “The problem is, they either can't refinance, because the value of the homes have gone down, so they're underwater, or the (loan) program they used to get into the home is no longer available to them.”
The best recap on the story comes from the Inman News Blog. Please read it here.