Countrywide 'out of the subprime business'

I have been saying that the no-doc loans aren't coming back for a while if ever and have been made fun of and called stupid. Looks like even Countrywide agrees with me.

By Noelle Knox, USA TODAY

Angelo Mozilo, the CEO of Countrywide Financial (CFC), outlined a new strategy Tuesday that would transform the nation's largest mortgage lender from an aggressive funding source for borrowers with tarnished credit into a more conservative thrift, dependent on savings deposits instead of Wall Street investors.

"We are out of the subprime business," Mozilo told investors at a conference in San Francisco. Nearly 25% of Countrywide's subprime borrowers were behind on their loan payments at the end of June.

Countrywide has also stopped making loans to people with good, or prime, credit who lack documented proof of their income or assets. Starting next year, Mozilo said, 80% of its mortgages will meet the standards of Freddie Mac and Fannie Mae, the government-backed institutions that buy loans to provide liquidity to the market. That's up from 60% at the end of last year.

"It's a reflection of the current market. The loans that are in demand are the ones with all the i's dotted and t's crossed," said Greg McBride, senior financial analyst at Bankrate.com. "This further signifies the easy credit of days gone by will be a relic of the past."

As the shakeout in the mortgage industry continues, Mozilo said he expects Countrywide's business to decline 25% next year compared with this year. The company has announced it will fire up to 12,000 of its employees. The plan unveiled Tuesday includes hiring more people in India who would take calls from delinquent borrowers hoping to renegotiate the terms of their loans and avoid foreclosure.

Record default rates and turmoil in the credit market, Mozilo said, have "repainted the entire mortgage landscape."

And the paint hasn't dried.

http://www.usatoday.com/money/economy/housing/2007-09-17-mortgage-outlook_N.htm