“We are experiencing home price depreciation almost like never before, with the exception of the Great Depression,” Countrywide Chief Executive Officer Angelo Mozilo said during a conference call with investors last month. He said it would take all of next year for the mortgage market to “turn this battleship around” before demand rebounds in 2009.
So Countrywide, the largest mortgage lender in the US, is in some fairly significant trouble because of the subprime mortgage market implosion and related fallout. It’s never good when you hear the current market compared to that of the Great Depression.
I won’t pretend to really understand what’s going on here beyond what’s covered in the article and a general understanding of the subprime implosion, but I understand enough to know that this problem looks to be expanding a lot more than anyone initially admitted it would. It’s not just small lenders who took on too much risk who are in trouble.
I don’t expect this will have any effect on the mortgage I have on our rental property out in Falls Church, which Countrywide bought from a smaller lender. I mean, I can’t imagine that Countrywide wouldn’t be able to find someone to take on that loan if they were going under (Which I don’t think is likely - they’re just missing earnings and having to tighten up their belt).
I’m actually more interested in what it’s going to do to the rental market, and to the value of the place where we live and the place we rent out. I’d really like a strong rental market in Falls Church. I’m not so concerned about the real estate market right now, since we have no immediate plans to buy or sell or take out a home equity loan. But that doesn’t mean I want the value of our home to crash. We will need a bigger place eventually.
I’m also wishing I had some spare cash lying around. Like maybe a couple hundred thousand dollars. When you have problems like this, there are ample opportunities for people with money to make more money. Unfortunately, my savings account doesn’t have that many zeros.