Countrywide Bankruptcy?

Hmmm… I Wonder what happened to Mozilo, Sambol and Sieracki’s “top-conditioned athlete”?

Today, Merrill Lynch managed to finally downgrade Countrywide Financial (NYSE:CFC) to a “sell” from their recent “buy” stance adding an additional little tidbit that “it is possible for CFC to go bankrupt”.

Great! Thanks… A “Buy” one day, “Sell” it may go bankrupt the next!

Superb Work… I love Wall Street.

On a serious note, you have to wonder how the leadership at Countrywide could have felt so certain of the fundamental strength of their business that they not only suggested that they would survive the downturn but, in fact, stated that the company would actually “benefit” from the inevitable industry consolidation that would ensue from market turmoil.

Were they simply inexperienced, unable to see the true nature of the historic housing run-up and inevitable proportionate bust and prepare the company adequately for possible systemic risk OR was something else afoot?

In any event, yesterday Countrywide released their July Operational Results showing again that delinquencies and foreclosures are continuing to rise with delinquencies jumping 64.58% and foreclosures soaring 126.09% since July of 2006.

Prior to January 2007, Countrywide reported foreclosure data as a percentage of the total number of loans serviced which obviously lacked complete clarity.

Below, are charts of both measures; foreclosures by total number of loans serviced and foreclosures by percentage of unpaid loan principle (Click for larger versions).

Either way you slice it, Countrywide is looking at some significant increases in foreclosure activity but notice that for the “unpaid loan principle” method, things are really looking dire.

Be sure to check out the Countrywide Financial Foreclosures (REO) Blog’s Inventory Tracker for some more startling evidence that foreclosures are skyrocketing over at Countrywide Financial as well as some excellent REO tracking features.