Countrywide Financial Corp. survived the first phase of the mortgage meltdown this summer thanks in part to a $2-billion investment from Bank of America.
But the Calabasas-based lender suffered a major new setback Tuesday when mortgage giant Freddie Mac posted a big loss and said it needed new capital -- which could curb Countrywide's ability to make loans.
When the mortgage crisis began last summer, Countrywide said it would cut back making higher-risk loans to concentrate on the safer loans it could sell to Freddie Mac and Fannie Mae, the government-chartered buyers of home loans.
That approach is now looking dicey in the wake of Freddie Mac's surprising $2-billion loss and its announcement that it must raise more capital before its regulator will allow it to step up purchases of loans from lenders such as Countrywide, said Fox-Pitt Kelton analyst Howard Shapiro, who downgraded Countrywide shares.
Keep in mind that Freddie can only scoop up supposedly high quality "conforming loans" which have certain characteristics. They're losing on those loans, and aren't able to continue scooping them up.