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Countrywide Scandal

In: Business and Management

Submitted By johnsonj
Words 340
Pages 2
Running head: COUNTRYWIDE

Countrywide Financial Corporation and the Subprime Mortgage Debacle by Janna Johnson
Bethel University
June 25, 2013

Strategies went awry as revenue slipped away into debt against irresponsible lending trends they had become accustomed. Founded in 1969 by Angelo Mozilo and David Loeb, this corporation saw much better days in the inception of their American dream and throughout the first couple of decades of its business as Countrywide Credit Industries in New York. Their goal was simply to provide home loans nationwide. They eventually opened more establishments in other major cities in the United States. Success seemed inevitable as they rose to the top of the loan industries and went public in selling trade shares. They acquired the Treasury Bank N.A. that they renamed Countrywide Bank FSB in 2001, and then renamed again the following year as Countrywide Financial Corporation. Their decent became more apparent in 2007 just a couple of years before they sold out to Bank of America. With the astounding numbers of mortgages in default, a general liquidity crisis unfolded before the public in 2008. The walls began to come tumbling down when losses at Fannie Mae and Freddie Mac began to mount and the American Insurance Group announced that they were unable to back the guarantees. The values of securities against loans were losing value. It was indeed catastrophic to the financial loaning institutions involved with the housing market crash that year. Their strategies of granting subprime mortgages backfired terribly. Having given out loans to so many borrowers with low credit scores and little money for downpayments came back to bite them on the backside bringing their kingdom down and forcing them to sell out. The relaxed standards used by the organization proved to be a failure in the end. Though home ownership increased, so...

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