Countrywide: "Home Price Depreciation At Levels Not Seen Since The Great Depression"

An amazing conference call with Countrywide Financial (CFC), the largest U.S. mortgage underwriter. It was beyond ugly. Here are some notable quotables from Chief Executive Angelo Mozilo:

- "During the quarter, softening home prices continued to affect many areas of the country, and delinquencies and defaults continued to rise across all mortgage product categories as a result."

-Delinquencies and defaults rising across all investment tools.

-Lower home prices may effect credit.

-S&P Case-Schiller is a strong tracking tool for health of housing market
[Editor: we have referenced this many times].

-CFC continues to study further tightening of loan standards for both subprime and prime.

-CEO believes markets will force the weaker mortgage companies to either work with bigger players or look elsewhere for business.

-For a Fed Governor to say that the lending group had this coming is unbelievable.

The WTF line that I don't get is this one:

"no one saw the deterioration of real estate values coming."

 

Here comes the money shot:

-"Company is seeing home price depreciation at levels not seen since the Great Depression."

-Previously, the company had stated it expected a turnaround in mid-2008; now, it says it's not sure when housing declines will cease. Refuse to rule out house price declines in 2009; 

-Surprising comment regarding the prime portfolio: so far what it has seen in delinquencies is due to people losing jobs, losing health, lost marriage, more so than any resets. Stated that the "definition of prime may not be as high as some people think."

-Expects to hear mergers and people going out of business in the near future;

-The company cut its 2007 earnings forecast to a range of $2.70 to $3.30 a share, down from previously lowered guidance of $3.50 to $4.30 range (projected in April). In the beginning of the year, the company said it expected to earn $3.80 to $4.80 a share.

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All told, a simply brutal and market-moving nearly 3 hour conference call . . .

Thanks to Briefing.com for the update.