Countrywide Financial Corporation And The Subprime...

Countrywide Financial Corporation and the Subprime Mortgage Debacle In order to discuss the financial crisis of 2008, a person must understand the history of the mortgage industry. This case study shed light on one of the leading companies in the mortgage industry, Countrywide Financial, helping people recognize the events that led up to the crisis of 2008 by providing a breakdown of the company and showing the range of their operations (Eastburn, 2010, p. 247-262). To help people understand the crisis of the mortgage company, strategies and plans will be discussed as well as a SWOT analysis on the industry that includes financial ratios, and recommendations for the organization. By the end of this paper, there should be a better understanding of the issues that led to the financial crisis as well as some ideas that may help them get back on track. Strategies Before 1929 loans were limited to a small percentage of people, and loan terms lasted from 3 to 10 years. Lenders provided roughly 60% of the money needed to buy a home, and the buyer had to come up with the rest for a down payment. With these loans, interest payments were paid monthly while the principal amount was due in full at the end of the loan term. These amounts could be rather large and led to people having problems paying them. Between the Great Depression and terms of the loans offered, lack of payment became the normal (Eastburn, 2010). Strategies were developed to aid in the financial crisis. TheShow MoreRelatedFinancial Analysis And Assessment Of Countrywide Financial Corporation870 Words   |  4 PagesThis paper intends to provide a financial analysis and assessment of Countrywide Financial Corporation. The financial evaluations are based on the numbers calculated from the data on Countrywide Financial Corporation’s Financial Performance Worksheets. This paper covers three areas. The first part of the paper contains a brief history of Countrywide and the position of the corporation in the market of real estate mortgage. The second part is a SWOT analysis of Countrywide s performance and the reasonsRead MoreEssay on Countrywide Financial Home Loans Failure1300 Words   |  6 Pages Countrywide Financial was cofounded by Angelo Mazilo and by the early 2000s it became the largest provider of home loans in U.S. It was also considered the main provider of home loans to minorities in U.S. because of its lower barriers regarding homeownership for low-income individuals. The company was well known for their services offered to their clients such as: loan closing, capital market, insurance and banking services. In 2000s the main factor that contributed to the company’s reputationRead MoreCountrywide Financial : A Large Diversified Financial Service Provider1018 Words   |  5 Pages Countrywide Financial was a large diversified financial service provider. They operate in five business segments, those being mortgage banking, banking, capital markets, insurance, and global operations. Countrywide was the largest market share among U.S. mortgage originators before unethical actions caused the downfall of the firm. Problems in Countrywide’s loan practices were evident. After the financial crisis of 2008 Countrywide was found to be a significant contributor to the subprime mortgageRead MoreCountrywide Home Loans ( Countrywide Hl )1466 Words   |  6 PagesCountrywide Home Loans (Countrywide HL) provide, service, and sell mortgage loans and after-loan services such as collections and payment processing. As a leader in the mortgage industry, they provide these products and serv ices to homeowners through prime and subprime mortgage loans and subsequently resell these loans to investors. In 2009, the United States (US) Treasury Department (Treasury) invested (i.e., US taxpayer-based funding) in Countrywide HL under the Treasury’s 2009 Troubled Asset ReliefRead MoreCountrywide Financial Case7873 Words   |  32 PagesCases in Crafting and Executing Strategy 15. Countrywide Financial Corporation and the Subprime Mortgage Debacle  © The McGraw−Hill Companies, 2011 Case 15 Countrywide Financial Corporation and the Subprime Mortgage Debacle Ronald W. Eastburn Case Western Reserve University Angelo Mozilo, founder and Chairman of Countrywide Financial Corporation, was the driving force behind the company’s efforts to become the largest real estate mortgage originator in the United States and, accordingRead MoreFinancial Crisis 20081224 Words   |  5 PagesJust after ten years of Asian financial crisis, another major financial crisis now concern for all developed and some developing countries is â€Å"Global Financial Crisis 2008.† It is beginning with the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and spread like a flood. At first U.S banking sector fall in a great liquidity crisis and simultaneously around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiestRead MoreFinancial Crisis 2008 Essay1160 Words   |  5 PagesJust after ten years of Asian financial crisis, another major financial crisis now concern for all developed and some developing countr ies is â€Å"Global Financial Crisis 2008.† It is beginning with the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and spread like a flood. At first U.S banking sector fall in a great liquidity crisis and simultaneously around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiestRead MoreCountrywide Subprime Lending Crisis4911 Words   |  20 PagesExecutive Summary Even though Countrywide stopped offering subprime loans 4 months ago, the company is still in the forefront of the subprime mortgage lending and foreclosure crisis. Lawsuits seem to be coming from all directions, federal and state investigative probes are launched against them, stock price tumbled to 1/5 of its value, even desperate lenders demonstrated outside their offices. 2007 has definitely not been Countrywide s year. The company has lost its place as America s Home LenderRead MoreEthics in the Mortgage Lending Business1566 Words   |  7 PagesEthics in the Mortgage Lending Business In America each person believes it is his or her right to own a home. Banks believe they should give each person the money to finance a home. Countrywide was at the forefront for many years in providing loans to consumers. Their ethics were placed into question when homeowners started losing homes after 2006. Bank of America intervened to assist on home loans affected. Their strong code of ethics, team values, and guiding principles ensured clients thatRead MoreImplementing New Loan Programs For An Earthquake1462 Words   |  6 PagesThe recession that we are currently undergoing had affected and continues to affect different business entities. One example is Countrywide, a mortgage lender corporation. In the fiscal year of 2001, 2002, and 2003 Countrywide experienced record earnings. Countrywide achieved this by implementing new loan programs that enabled them to defeat competitors. However, for several important reasons, decision making managers need to understand different managerial skills in order to avoid undesirable