Random Countrywide Malaise

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With Countrywide’s sure-to-be dismal earnings call this Friday there has been some news of note to pass along to you.

Countrywide stock hammered today on fears of Option ARM exposure

No kidding?!! Option ARMs are going to be the next big disaster. Wait till those bad-boys start resetting with no equity. You want to watch the definition of ‘prime’ credit be dismantled? Look for 2010-2011 for proof of the arbitrary nature of credit scores vs. the very real nature of earning capacity and debt service.

From Market Watch:

UBS AG prepared an analysis for the WSJ showing that 3.55% of option ARMs originated by Countrywide in 2006 and re-packaged into mortgage-backed securities are at least 60 days past due, the newspaper said. That compares with an average option-ARM delinquency rate of 2.56% for the industry, the WSJ noted.

Option ARMs in 2006? Really? How are these people behind on a minimum 1.5% start rate payment? So much for great credit risks offsetting exposure from neg-am loan resets. Laughable, but it’s not. More on this for the next 3 years until we hit 2010.

The first Countrywide director quits before earnings. (I wonder how many will quit after?)

Countrywide Financial said late Wednesday that director Henry Cisneros is leaving the board of the mortgage lender to focus on CityView, an urban homebuilding finance company he chairs. Cisneros has been a Countrywide director since 2001.

Either quit or risk ending up in court, in cuffs or behind bars … right?