Industry News

Countrywide taps $11.5 billion credit line

Loan production being shifted to banking division

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Countrywide Financial Corp. has borrowed $11.5 billion from 40 of the world's largest banks and is speeding up plans to move its mortgage loan production over to its banking division, Countrywide Bank FSB. The move -- announced a day after a Merrill Lynch analyst said the nation's largest lender could face bankruptcy if it's unable to obtain money to continue making loans -- was a response to liquidity shortages and a lack of demand for securities backed by non-agency mortgage loans, Countrywide officials said. Secondary market demand for mortgages that aren't eligible for repurchase by government-sponsored entities (GSEs) Fannie Mae or Freddie Mac has "been disrupted in recent weeks," Countrywide President and Chief Operating Officer David Sambol said in a statement. "Along with reduced liquidity in the secondary market, funding liquidity for the mortgage industry has also become constrained." Friedman, Billings, Ramsey Group Inc. analyst Paul Miller said today that if liquidity rema...