Running Head: COUNTRYWIDE BUSINESS PROPOSAL
Countrywide Financial Corporation Business Proposal
Countrywide Financial Corporation Business Proposal
News reports state that rising mortgage defaults and delinquencies have shut down the subprime mortgage markets (Lubby, 2008). Companies are facing huge losses because of the housing boom that has gone sour. One financial company that has been in the news more often than others is Countrywide Financial Corporation (CFC). CNNMoney.com reported on March 13, 2008 that while delinquency rates fell from 7.47% in January 2008 to 7.44% in February, foreclosures continue to rise ( This paper will focus on the financial problems facing Countrywide and recommendations for actions the lender should take to improve its financial status.
Countrywide’s foreclosure rates have increased due to loan defaults by consumers. “The nation’s largest residential mortgage lender, with a market share of 17%, said its foreclosure rate almost doubled in January from the same month a year ago” (Muolo, 2008). The dependent variable in this situation is Countrywide’s profits and market share. The company’s profit is declining along with their market share with the increase in defaults. This has also affected their workforce, forcing the company to develop department restructuring programs that will eventually lead to layoffs. The independent variable is the number of foreclosures occurring as homeowners face financial difficulty in paying their monthly mortgages.
Some analysts blame the subprime mortgages for the rise in foreclosures. Lenders offer subprime mortgages to high-risk borrowers. Generally, subprime borrowers pay 200 to 300 basis points above the prevai ...