Countrywide Financial Corporation

Rebranding loans

Originally known as Countrywide Credit Industries, Inc., the company underwent two name changes, changing its name to Countrywide Financial Corporation in November 2002 and being rebranded as Bank of America Home Loans in 2009 after operating as a subsidiary of Bank of America Corporation since July 2008.  The company provides multiple services, including home loans; refinance mortgage solutions; home equity loans and home equity line of credits; home loans for new home purchases, as well as second, vacation and investment homes; reverse mortgage products; and multifamily and commercial loans.

Humble beginnings

In 1969 Angelo Mozilo, who began his career as a 14-year-old messenger for a Manhattan mortgage company, and David Loeb launched their own mortgage company, Countrywide Credit Industries.  Before the year's end, Countrywide went public, trading at less than $1 per share.  The offering did not raise much capital, but undeterred, the two New York bankers left the Big Apple thereafter and opened an office in Los Angeles amidst a booming housing market.  During its initial years in business, the company offered Federal Housing Administration and the Veterans Administration loans through a commissioned sales force.  Countrywide has always focused on the multicultural community and is the largest lender to minorities, including being the top lender to African Americans, Hispanics and Asians, as well as the leading lender in low- to moderate-income communities.

However, the firm's founders believed that its existing business model did not provide the proper type of customer service and decided they needed to move in a new direction.  Over lunch one day, the two came up with a model that would revolutionize the way they do business.  Namely, the company would open branch offices without sales people where customers could receive retail bank-like service.  The first branch was opened in 1974 in Whittier, Calif.  Over the next 10 years, loan production and branches grew steadily, and by 1980, there were 40 Countrywide branches in nine states.  Eventually, the firm further expanded lending operations into conventional loans that could be sold to Fannie Mae and Freddie Mac.  Growth continued, and Countrywide rose up in the ranks of mortgage lenders in the United States.  In 2006, the company became the first mortgage lender to surpass $1 trillion in servicing.

Thousand jobs slashed

By the third quarter of 2007, Countrywide had to admit that its losses were significant enough so that in order to pull the company out of the looming shadow of bankruptcy, it would have to cut some of its workforce.  In September 2007, it did more than just lay off “some†employees.  Countrywide announced that in the next three months, it would trim its labor force by 10,000 to 12,000 jobs.  At the time of the announcement, this number represented approximately 20 percent of Countrywide's 60,000 employees.  The layoffs were directed at mortgage underwriters and back-office operations, leaving those in the banking and insurance divisions relatively unscathed.

Lawsuits, lawsuits, lawsuits

After it became apparent that Countrywide was in dire straits, many investors became understandably upset about the company's misrepresentation of its financial stability.  Five separate lawsuits were filed, and in December 2007, a federal judge consolidated them all together and appointed New York's Common Retirement Fund and New York City Pension fund as the lead plaintiffs.  The company's third quarter losses were $1.2 billion, and the stock price had lost nearly 75 percent of its value in the past year.  At the time that the consolidation of the lawsuits was announced, the stock was trading at $10.68, far lower than its 52-week high of $45.26.  As if the losses faced by the company were not enough, Bank of America reported a net loss of $1 billion for the third quarter of 2009 which was somehow offset by its $6.5-billion net income.



Countrywide Financial Corporation


4500 Park Granada
Calabasas, CA 91302-1613
Phone: (818) 225-3000
Fax: (818) 225-4051
www.countrywide.com

STATS


  • Employer Type: Public
  • Stock Symbol: CFC
  • Stock Exchange: NYSE
  • Chairman and CEO: Angelo R. Mozilo
  • 2007 Employees: 54,655

Key Financials

  • 2007 Revenue: $6,060 million

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