I came across yet another blog run by real estate professionals trying to put on a brave face by saying everything is OK.
This one is called Rain City Guide and the article in question is called No, Chicken Little, the sky isn’t falling…
A friend of mine that works in a small town bank in Kansas called me in a panic the other day because the officers at the bank were freaking out during a meeting saying that Countrywide was going bankrupt. For them there is concern because Countrywide buys all of their residential loans. Apparently they must have seen some similar version of the story that the local Seattle Times had about the lender’s trading shares nosediving. I contacted a long time lender friend of mine (and 25 year lending veteran) who works at Countrywide and asked him if he’d write a quick article about it which you can access here.
Basically, his biggest concern about the share price dropping had to do with the possibility that Countrywide might then become a takeover target by a bank such as Bank of America or someone, and he isn’t interested in working for one of these folks. As for accessing the line of credit, well, that in and of itself doesn’t mean they’re in a pickle, it means they don’t want to be reliant on a volatile marketplace for borrowing money. Makes financial sense to me.
Wow. Supposedly this guy’s “only concern” is whether or not Countrywide is taken over. No concerns over a loss of a job, no concerns over loss in income, and no concerns over bankruptcy.
By the way, clicking on the “Access Here” link above, takes one to yet another real estate blog. This one is called “Team Reba Seattle Real Estate Blog“. It seems there is an entire network of real estate professionals in Seattle (I can’t say I blame them actually) all attempting to convince everyone that things are normal. Supposedly these guys have no fears.
But just because something may make financial sense, does not at all imply the situation was normal. The situation at Countrywide was far from normal and to tap their entire credit line was a clear sign of weakness and concern, not a sign of strength. The financial reason is more likely to have been “better take that credit now while someone is still dumb enough to lend to us” as opposed to much of anything else. For more on the story please see Mad Dash For Cash.
And anyone having no concerns about jobs or bankruptcy at Countrywide is either very foolish or simply is so well off that he/she does not need a job. One look at the Mortgage Lender Implode-O-Meter count now at sitting 128 should be enough to convince anyone.
By the way, some of you may not be aware but Mike Morgan has started his own blog. His latest entry Real Estate and Housing Industry Outlook for August 18, 2007 is now posted.
Mike Shedlock / Mish/