Countrywide Mortgage just released new corporate data and it ain't looking any prettier. The front page was all nice and smiles about how they are raising money - but buried on the back pages was the real story.
Mortgage delinquencies up 10% from November to 6.9% of all mortgages serviced, to 6.9% of their total loan servicing portfolio. Why do those numbers mean a lot?
Countrywide sells most of their mortgages but they keep the loan servicing as their cash cow. Therefore, having 6.9% of their servicing portfolio in delinquency means that these delinquencies are rippling through the investor class. That is number one.
Number 2, Countrywide says that only 8% of their loan servicing portfolio is subprime. So, either over 80% of their subprime loans are in delinquency or the delinquencies are running high in the better credit mortgages.
Three, the chief investment officer of Fort Pitt (a big fund manager) was looking at those numbers and said (paraphrasing):
We expect housing prices to move lower and if they do, we expect people to look seriously at the advantage of just walking away from their houses. Especially if people start to worry about their job security from higher unemployment, this will be a bigger choice.
I was riding the chair lift skiing Saturday and our chair mate from Dallas told a story. Their friend had an ARM mortgage but very good credit. However, they had a $700,000 loan on an $800,000 house. This person's neighbor across the street got dead under water on their house and put it on the market at $500,000. The guy bought the house with a $450,000, got a loan (because of his good credit) and then turned the keys in on his house. Figured the credit rating hit was worth - in his mind - a $250,000 profit on flipping the houses.
All in all, the sound of the next shoe dropping.