Third Quarter Reportings Shake The Market

Reuters News Service and the Associated Press are both quoting a story in the Wall Street Journal on Wednesday that the controversial CEO of Countrywide Mortgage, Angelo Mozilo, is under an informal investigation by the Securities and Exchange Commission (SEC).

Countrywide is the largest mortgage company in the country and Mozilo, its founder, is generally credited or blamed for the company's evolution from a mostly conventional lender into one where subprime products dominated.

Along with dozens of other companies Countrywide faced a liquidity crisis several months ago. Because of rising default rates among its loans 61 percent of its capitalization ($15 billion) evaporated during the first eight months of 2007 and its survival was in some doubt until Bank of America stepped forward to invest $2 billion in the company, Countrywide is still casting around for additional investors and a Reuters article on September 12 said that there were large numbers of $10 Countrywide October Puts outstanding. A Put is an option that allows an investor to purchase a stock at that price - essentially a bet that a stock price is going to fall before expiration of the Put. At that time Countrywide was trading at $16 and change. The stock, however, closed yesterday at $17.35. One year ago the stock was selling in the $40 range.




Countrywide has announced plans to eliminate 10,000 to 12,000 jobs - approximately 20 percent of its workforce - and will take a $125 to $150 million pretax restructuring charge resulting from the downsizing.

The SEC is apparently investigating a dozen or so companies, including Countrywide, in connection with the subprime mess but, according to The Wall Street Journal article it is taking a special if informal look at Mozilo.

At issue is the sale by Mozilo of some 130 million of his company's stock in the first six months of 2007. It seems that there is a rather large loophole... ahem, provision, in the rules against insider trading that allows an insider to set up what is called a 10b51 trading plan. Such a plan, once established, allows the insider to proceed with transactions such as buying, selling, or exercising options even if he or she subsequently comes into possession of information that might impact stock prices which is not available to the public.

North Carolina's state treasurer Richard Moore last week asked the SEC to investigate Mozilo's stock sales, claiming that there were changes made to the pre-set trading plans in the months before the company's stock fell. An SEC insider speaking under a guarantee of anonymity, however, said that the informal inquiry into Mozilo's stock activities had been going on for a while.

The SEC had no immediate comment on the report nor did Countrywide, but the agency has previously said it is "looking hard at the general issue of whether executives are illegally trading on insider information and using a preset trading plan to avoid suspicion."

Forbes lists the 68-year-old Mozilo as the nation's seventh most highly compensated chairman with a total compensation package of $141.98 million (approximately $48 million in salary.) Over the last five years his total compensation was $295.73 million. He is listed as the top-ranked executive within Forbes category of Diversified Financials.

Think Your Company Is In Trouble?

Be glad you don't work for one of the following companies. They are subprime
lenders that have been major lending forces in the United States over the last
several years. Every one of them are either out of business or no longer funding
deals. Do any of these match your mortgage statement.

"Imploded" Lenders:
117. Express Capital Lending
116. Deutsche Bank Correspondent Lending Group (CLG)
115. MLSG
114. Trump Mortgage
113. HomeBanc Mortgage Corporation
112. Mylor Financial
111. Aegis (Everything)
110. Alternative Financing Corp (AFC) Wholesale
109. Winstar Mortgage
108. American Home Mortgage / American Brokers Conduit
107. Meridias Capital
106. Fieldstone Mortgage Company
105. Nations Home Lending
104. Wells Fargo Alternative Lending Wholesale
103. Entrust Mortgage
102. Flick Mortgage/Mortgage Simple
101. Alliance Bancorp
100. Choice Capital Funding
99. Premier Mortgage Funding
98. Stone Creek Funding
97. FlexPoint Funding (Wholesale)
96. Starpointe Mortgage
95. Unlimited Loan Resources (ULR)
94. Freestand Financial
93. Steward Financial
92. Wells Fargo (Correspondent)
91. Altivus Financial
90. ACT Mortgage
89. Alliance Mortgage Banking Corp (AMBC)
88. Concord Mortgage Wholesale
87. Heartwell Mortgage
86. Oak Street Mortgage
85. The Mortgage Warehouse
84. First Street Financial
83. Right-Away Mortgage
82. Heritage Plaza Mortgage
81. Horizon Bank Wholesale Lending Group
80. Lancaster Mortgage Bank (LMB)
79. Bryco (Wholesale)
78. No Red Tape Mortgage
77. The Lending Group (TLG)
76. Pro 30 Funding
75. NetBank Funding
74. Columbia Home Loans, LLC
73. Mortgage Tree Lending
72. Homeland Capital Group
71. Nation One Mortgage
70. Dana Capital Group
69. Millenium Funding Group
68. MILA
67. Home Equity of America
66. Opteum (Wholesale, Conduit)
65. Innovative Mortgage Capital
64. Home Capital, Inc.
63. Home 123 Mortgage
62. Homefield Financial
61. First Horizon (Subprime)
60. Platinum Capital Group
59. First Source Funding Group (FSFG)
58. Alterna Mortgage
57. Solutions Funding
56. People's Mortgage
55. LowerMyPayment.com
54. Zone Funding
53. First Consolidated (Subprime Wholesale)
52. EquiFirst
51. SouthStar Funding
50. Warehouse USA
49. H&R Block Mortgage
48. Madison Equity Loans
47. HSBC Mortgage Services (correspondent div.)
46. Sunset Direct Lending
45. Kellner Mortgage Investments
44. LoanCity
43. CoreStar Financial Group
42. Ameriquest
41. Investaid Corp.
40. People's Choice Financial Corp.
39. Master Financial
38. Maribella Mortgage
37. FMF Capital LLC
36. New Century Financial Corp.
35. Wachovia Mortgage (Correspondent div.)
34. Ameritrust Mortgage Company (Subprime Wholesale)
33. Trojan Lending (Wholesale)
32. Fremont General Corporation
31. DomesticBank (Wholesale Lending Division)
30. Franklin Financial (Wholesale Operations)
29. Ivanhoe Mortgage/Central Pacific Mortgage
28. Eagle First Mortgage
27. Coastal Capital
26. Silver State Mortgage
25. ResMAE Mortgage Corporation
24. ECC Capital/Encore Credit
23. Lender's Direct Capital Corporation (wholesale division)
22. Concorde Acceptance
21. DeepGreen Financial
20. Millenium Bankshares (Mortgage Subsidiaries)
19. Summit Mortgage
18. Mandalay Mortgage
17. Rose Mortgage
16. EquiBanc
15. FundingAmerica
14. Popular Financial Holdings
13. Clear Choice Financial/Bay Capital
12. Origen Wholesale Lending
11. SecuredFunding
10. Preferred Advantage
9. MLN
8. Sovereign Bancorp (Wholesale Ops)
7. Harbourton Mortgage Investment Corporation
6. OwnIt Mortgage
5. Sebring Capital Partners
4. Axis Mortgage & Investments
3. Meritage Mortgage
2. Acoustic Home Loans
1. Merit Financial



Just because your mortgage statement has one of the names from the list on it does not mean you shouldn't pay your mortgage. They are all still servicing the loans
in some form or another!

-Christopher Rockey

Market Update

California Foreclosure Sales Reach $12 Billion in First Half of 2007: Up 95% from January to June

DISCOVERY BAY, Calif., Jul 10, 2007 (BUSINESS WIRE) -- ForeclosureRadar(TM) (ForeclosureRadar.com) today released its June 2007 California Foreclosure Report. This unique monthly report includes previously unavailable auction sales data providing a far more timely and accurate picture of California's foreclosure marketplace.

ForeclosureRadar(TM) is the first statewide foreclosure information service to track each and every foreclosure auction throughout the state on a daily basis. Other foreclosure listing services rely primarily on documents recorded at the county which delays the reporting of actual foreclosure sales trends by weeks or even months.

A total of 6,960 homes were sold at auction in June with a loan value of $2.83 Billion in California. Riverside County had the highest number of foreclosure sales at 1,093 properties and $523M in loan value. Los Angeles County was second in terms of volume, but after adjusting for population, ranked 34th in the State. Yuba, Sacramento and San Joaquin Counties ranked 2nd, 3rd and 4th highest respectively with Marin County having the lowest foreclosure rate in California. Foreclosures now represent 16% of all new and resale home sales in the state.

According to ForeclosureRadar founder Sean O'Toole, "Lenders are building a significant REO inventory. Since January 1, 2007, a total of 29,696 California properties have been returned to the lender for an astonishing total loan value of $12 Billion. This is unprecedented." In June alone 6,552 properties were returned to the lender for a total of $2.69 Billion.

California Foreclosure Statistics By County
Population
Rank County NDF NTS Sales Per Sale
----------------------------------------------------------------------
1 RIVERSIDE 2392 1337 1093 1,787
2 YUBA 71 38 31 2,252
3 SACRAMENTO 1367 782 613 2,260
4 SAN JOAQUIN 660 389 290 2,297
5 STANISLAUS 475 290 203 2,534
6 SUTTER 64 46 32 2,858
7 MERCED 153 58 84 2,938
8 CONTRA COSTA 833 423 337 3,055
9 LAKE 23 27 20 3,205
10 SAN BERNADINO 1862 959 609 3,271


I have told my clients the same thing for years now.
"There Is Not A Graduate School In The U.S. That Does Not Teach Real Estate
Investing As An Important Way To Diversify Your Investment Portfolio."

-Christopher Rockey