Countrywide says it's not filing for bankruptcy - Mortgage lender slumps on concern it needs a big cash infusion to survive
By Alistair Barr, MarketWatch
SAN FRANCISCO (MarketWatch) -- Countrywide Financial Corp. said Tuesday that it's not filing for bankruptcy as speculation swirls about the mortgage lender needing billions of dollars in extra cash to survive.
Shares of Countrywide slumped 28% to close at $5.47, the lowest level in more than a decade.
"There is no substance to the rumor that Countrywide is planning to file for bankruptcy," the company said in a statement emailed to MarketWatch.
Countrywide also said that it's not aware of any leading agencies that are considering downgrading the company's ratings.
As the largest mortgage lender in the United States, Countrywide has been hit hard by the subprime-fueled credit crisis. The company has stopped offering many types of more-profitable, riskier home loans and is focusing on selling mortgages that conform to the standards of government-sponsored enterprises like Fannie Mae and Freddie Mac.
However, Fannie and Freddie have suffered big mortgage losses themselves in recent months.
"Countrywide is severely challenged and might falter if it does not receive an infusion of at least $4 billion within the next couple of weeks," Egan-Jones Ratings Co., a ratings agency, wrote in a note Tuesday. "The GSEs likely curtailing purchases have hurt Countrywide."
'Recreated' documents
Countrywide shares were also pressured after the New York Times reported that the company falsified some documents.
A lawyer for Countrywide told a judge recently that the lender "recreated" three letters related to the bankruptcy case of a Pennsylvania homeowner, the newspaper reported, citing court records.
Real Estate Investing
January 6, 2008
Real Estate Investment Prices - Three indexes
The price of a home is generally a price comparison of like properties in a similar area, based on either a multiple of rent/income or comparison of cost square footage.
We are all familiar with the MLS, the traditional vehicle for listings. However, the internet has been able to offer us many more sources of price comparison.
Two other important sources for the health of the market and for price comparisons are:
1. Case-Schiller Index: A monthly index which measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan region across the United States . The methodology captures repeat sales in homes. This shows up as price change up or down.
2. HPI home price index: Compiled by the OFHEO (Office of Federal Housing Enterprise Oversight). The HPI is a broad measure of the movement of single-family house prices which measures average price changes in repeat sales or refinancing on the same properties. The HPI is a quarterly report.
But, if you wanted to get a sense of price movement to buy sell or refi then a daily index, giving you absolutely current price information then you should look here:
3. RPX: The Radar Logic home page has a good explanation of how the daily numbers are created. The intended use is to try and establish an index that can trade in the stock market. However, the index is a good indicator for buyers and sellers as well. The Residential Price Index tracks 25 MSA's, or Metropolitan Statistical Areas from around the country. Individual index numbers are available for each, as well as a U.S. Composite number for the whole country. The index uses prices per square foot for its calculations, instead of gross sales prices of homes. A chart of price change in 25 major cities is produced daily.
Real Estate Investment
We are all familiar with the MLS, the traditional vehicle for listings. However, the internet has been able to offer us many more sources of price comparison.
Two other important sources for the health of the market and for price comparisons are:
1. Case-Schiller Index: A monthly index which measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan region across the United States . The methodology captures repeat sales in homes. This shows up as price change up or down.
2. HPI home price index: Compiled by the OFHEO (Office of Federal Housing Enterprise Oversight). The HPI is a broad measure of the movement of single-family house prices which measures average price changes in repeat sales or refinancing on the same properties. The HPI is a quarterly report.
But, if you wanted to get a sense of price movement to buy sell or refi then a daily index, giving you absolutely current price information then you should look here:
3. RPX: The Radar Logic home page has a good explanation of how the daily numbers are created. The intended use is to try and establish an index that can trade in the stock market. However, the index is a good indicator for buyers and sellers as well. The Residential Price Index tracks 25 MSA's, or Metropolitan Statistical Areas from around the country. Individual index numbers are available for each, as well as a U.S. Composite number for the whole country. The index uses prices per square foot for its calculations, instead of gross sales prices of homes. A chart of price change in 25 major cities is produced daily.
Real Estate Investment
January 5, 2008
Private Lending: An Alternative Funding Source
Private Lending: An Alternative Funding Source
From Lil Sawyer
Where do entrepreneurs go when the bank says "No"?It happens everyday. Well-prepared entrepreneurs are walking into the banks with brilliant business ideas with well developed business plans — and are walking out empty-handed. Many of these professionals are ultimately able to obtain financing from private lender, like Tom McKenzie through business capital brokers.
For individuals who do not want to give up a certain percentage ownership in the business as is often required by venture capitalist and deal with the angel investors who may demand a board position or significant day-to-day control, the private lender may be an alternative worth considering.
On the whole private lenders are looking for the same information and will conduct a similar due diligence as the banks to make a positive funding decision. They are looking for great business ideas, at the right time, with an airtight business plan, that includes contingency scenarios and realistic forecasts, backed by experienced and professional people with some financial stake in the business.
However, most private lenders are “specialists” who engage in higher risk ventures because they clearly understand both the opportunity and risk associated with selected business types or market segments. Private lenders will not only fund project the banks rejects, they will creatively structuring loan repayment and sometimes be a helpful resource.
For example, Mr. McKenzie has a background in the automotive market; accordingly he has funded projects such as automobile dealerships, transportation and trucking businesses and manufacturing for the automobile sector. While he does not have a professional background in medicine, he has also developed an interest in providing capital to medical practices because of the doctor shortage and because doctors on the whole are responsible debtors. Additionally, businesses like wineries are attractive because they are high asset based and offer more security. He will also provide funding in emergency and rescue situations.
When asked how he makes the decision to fund a project, Mr. McKenzie laughs and said, “you do the best due diligence you can and then it’s just like gambling at a slot machine. You put your money in and take the risk and hope for the best. Knowing that statistically some of the businesses will do well and others will fail. You learn the most from failures.” After twenty years of investing in both winners and losers he has developed an evaluation methodology to help him select the businesses with the highest probability to be profitable and succeed long-term.
Given the relatively low profile of most private lenders, Mr. McKenzie says that a significant number of the best projects come to his attention via business capital brokers. “The brokers screen the projects, giving me a wider selection of projects that match my specific parameters”. Business capital brokers will normally develop relationships with hundreds or thousands of lenders and investors, so the key is to sell the broker on your business plan and get him or her sufficiently excited about your project to recommend it to the right lenders or investors.
Lil Sawyer is Managing Director with FundingLinks, a business capital broker company in Toronto that assists entrepreneurs and businesses to secure capital worldwide. She can be reached at 905-427-9726 or by email at lil AT fundinglinks.com.
Private Lending
From Lil Sawyer
Where do entrepreneurs go when the bank says "No"?It happens everyday. Well-prepared entrepreneurs are walking into the banks with brilliant business ideas with well developed business plans — and are walking out empty-handed. Many of these professionals are ultimately able to obtain financing from private lender, like Tom McKenzie through business capital brokers.
For individuals who do not want to give up a certain percentage ownership in the business as is often required by venture capitalist and deal with the angel investors who may demand a board position or significant day-to-day control, the private lender may be an alternative worth considering.
On the whole private lenders are looking for the same information and will conduct a similar due diligence as the banks to make a positive funding decision. They are looking for great business ideas, at the right time, with an airtight business plan, that includes contingency scenarios and realistic forecasts, backed by experienced and professional people with some financial stake in the business.
However, most private lenders are “specialists” who engage in higher risk ventures because they clearly understand both the opportunity and risk associated with selected business types or market segments. Private lenders will not only fund project the banks rejects, they will creatively structuring loan repayment and sometimes be a helpful resource.
For example, Mr. McKenzie has a background in the automotive market; accordingly he has funded projects such as automobile dealerships, transportation and trucking businesses and manufacturing for the automobile sector. While he does not have a professional background in medicine, he has also developed an interest in providing capital to medical practices because of the doctor shortage and because doctors on the whole are responsible debtors. Additionally, businesses like wineries are attractive because they are high asset based and offer more security. He will also provide funding in emergency and rescue situations.
When asked how he makes the decision to fund a project, Mr. McKenzie laughs and said, “you do the best due diligence you can and then it’s just like gambling at a slot machine. You put your money in and take the risk and hope for the best. Knowing that statistically some of the businesses will do well and others will fail. You learn the most from failures.” After twenty years of investing in both winners and losers he has developed an evaluation methodology to help him select the businesses with the highest probability to be profitable and succeed long-term.
Given the relatively low profile of most private lenders, Mr. McKenzie says that a significant number of the best projects come to his attention via business capital brokers. “The brokers screen the projects, giving me a wider selection of projects that match my specific parameters”. Business capital brokers will normally develop relationships with hundreds or thousands of lenders and investors, so the key is to sell the broker on your business plan and get him or her sufficiently excited about your project to recommend it to the right lenders or investors.
Lil Sawyer is Managing Director with FundingLinks, a business capital broker company in Toronto that assists entrepreneurs and businesses to secure capital worldwide. She can be reached at 905-427-9726 or by email at lil AT fundinglinks.com.
Private Lending
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