Hey Mozilo….Your cash ain’t nothin’ but trash!!

Here we go again! As most of you may have heard, according to The Wall Street Journal, Countrywide (CW) is now being investigated by the FBI and the Department of Justice for securities fraud.

According to the Associated Press.

"Investigators are looking at evidence that may suggest that company executives knew their mortgage securities would see many more defaults than predicted in its public documents, one source told the Journal."

"Congressional figures showed that Countrywide lost $1.2 billion in the third quarter of 2007 and another $422 million in the fourth quarter. The company's stock fell 80 percent between February and the end of the year.

During the same period, Mozilo received a $1.9 million salary, $20 million in stock awards contingent upon performance and sold $121 million in stock."

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Now folks, I wonder how this will affect BoAs (Bank of America) recent agreement to purchase CW? BoA is wanting to purchase CW for roughly 4 billion. Will they still be willing to go through with this? Not only will they be purchasing a company that is losing an incredible amount of money but, in my opinion, hasn't seen anything yet. Their future loses are going to be mind boggling!!

In my area, Countrywide was the dominate lender over the last 5 years or so and it seems like everyone I talk to has a CW mortgage that is in default. The 3rd quarter for 2007, where CW lost 1.2 billion, was just the very beginning of things to come. I'll be curious to see how large that loss is in the 3rd quarter of 2008 which just happens to be the time when BoA hopes to finalize their purchase.

As for Mozilo, I just don't know. How can a business go down the tubes and the CEO still be able to walk away with that amount of money? He says he was selling off his stock to get ready for retirement. Well, maybe…but come on…could your timing be any worse?

Of course the defense always seems to be that this compensation is for past performance. Well OK then……that certainly makes it all right. I guess the compensation he received in the past was just not enough.

I just don't get it. I'm a simple man and own a very small business. I get paid well when things are going well and when they aren't, I may not get paid at all. For some reason this doesn't apply to CEOs. It seems like every time one of these big corps takes a beating the CEOs walk away with a bundle of cash and a lot of excuses.

Meanwhile, families in Poinciana FL are being destroyed by CW loans that they should have never been qualified for in the first place. Of course they too have the option of walking away. However, they won't be leaving with a fist full of cash, just the stigma of being a "loser". Go figure.     

Anyway, those are my thoughts. What are yours?

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Bryant Tutas
Broker/Owner
Tutas Towne Realty, Inc
Licensed Florida Real Estate Broker
http://www.brokerbryant.com/
***The content of this blog is solely my opinion*** 

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