After jumping 6 percent in premarket trading, the Calabasas-based mortgage lender slid back during the session and finished with a 1.1 percent gain. The culprit might have been President Bush, who was long on promises and short on specifics today in saying that he would work to "modernize and improve" the Federal Housing Administration "by lowering down payment requirements, by increasing loan limits, and providing more flexibility in pricing." Douglas McIntyre at 24/7 Wall Street called the early action on Countrywide a "sucker rally," adding that "anyone who bought these stocks at the open is taking a beating." The real point here is that the administration felt obligated to say something about the mortgage crisis, but there doesn't seem to be much enthusiasm to actually do anything of substance. This is especially true given the Mortgage Bankers Association's survey that shows the rising delinquency rates to be largely the result of people buying homes as investment vehicles. Why help out speculators who might just as easily walk than try to work out a deal with their bankers? Here's more from the NYT:
The administration is offering his plan, which will include what one official called jawboning of lenders to persuade them not to foreclose on some borrowers, at a time of growing attacks on Mr. Bush from Democrats who say he has remained on the sidelines amid increasing anxiety over whether millions of Americans could end up losing their homes. Other elements of the plan would need legislative action, requiring Mr. Bush to win over the Democratic leadership in Congress.
The main objective of the package, one senior official said, is not to affect the stock markets but to help low-income homeowners, many of them concentrated in certain neighborhoods in several distressed areas of the country, such as Ohio and Michigan. "The primary focus is to help individuals who have an opportunity to stay in their homes to stay in their homes,” this official said. “The subprime mortgage situation is having a crushing effect on a lot of communities right now.”