According to an insider account reported by the New York Post, Countrywide is looking for more cash, and a bevy of companies have shown interest in the beleaguered lender, including J.P. Morgan, Citigroup, and several hedge funds.
The report says a new deal may be struck by the end of the month, probably a sign of Countrywide’s desperation.Countrywide has hired Goldman Sachs and law firm Wachtell Lipton Rosen & Katz to arrange the strategic investment.
I mentioned in a post a while back that Countrywide’s liquidity issues would likely lead to the closure of certain aspects of the Countrywide business model.
In fact, an inside source told me that a higher-up at Countrywide said months ago that wholesale would likely shutter as a result of the lack of cash, and that the unit could only be supported for a few more months.
It also makes sense for correspondent lending to go for the sheer liability of poor quality loans being originated through that unit, particularly as Countrywide struggles to dump its ever-growing inventory of unmarketable loans.
The news comes on the heels of the massive Countrywide layoffs that were announced early last week.
The only real positive to this news is the possible easing of Countrywide bankruptcy fears which have lingered ever since a Merrill analyst dropped the “B” word.
Countrywide declined to comment on the report.
The stock opened slightly lower in early trading, dipping below $17 a share on renewed cash concerns.