Loan Giant Downgraded to 'Sell,' Faces Bankruptcy

Top US mortgage lender caught in the squeeze
By Heather McPherson,  Newser User
Posted Aug 16, 2007 7:44 AM CDT
Loan Giant Downgraded to 'Sell,' Faces Bankruptcy
A Countrywide Banking and Home Loans office is seen in Los Angeles Friday, Aug. 10, 2007. While most of the mortgage market worries so far have focused on the huge losses flowing from the subprime home loans made to people with bad credit, the option and interest-only ARMs held by more creditworthy...   (Associated Press)

Loan giant Countrywide saw its shares plummet 13% yesterday after the company experienced trouble borrowing money in the market for short-term debt. A Merrill Lynch analyst downgraded the stock from "buy" to "sell," sparking talk of possible bankruptcy, reports the LA Times. Before today's open, the company announced it's drawing on $11.6 billion in unsecured lines of credit.

The California-based lender, which wrote one of every six US home loans from January to June of this year, blamed "unprecedented disruptions" in the credit markets for its financing woes in a regulatory filing last week, adding, "the potential impact on the company is unknown." Countrywide stock has lost 50% of its value in 2007. (Read more Countrywide stories.)

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