CEO Blames Loan Rivals for Eroding Earnings

I thought this article from the LA Times was pretty informative. Basically, the CEO of Countrywide is blaming two other sub-prime lenders, Ameriquest and New Century, for writing risky loans in an effort to maintain profitability and market share. Eventually, many of these loans are going to go into default and the sub-prime lending industry is going to suffer.

[CEO Blames Loan Rivals for Eroding Earnings
By E. Scott Reckard, Times Staff Writer

Brutal competition in the shrinking home loan market has caused "irresponsible players" such as Ameriquest Capital Corp. and New Century Financial Corp. to spoil mortgage banking profits, the chairman of No. 1 home lender Countrywide Financial Corp. said Tuesday.

Announcing earnings that disappointed Wall Street, Countrywide founder Angelo R. Mozilo singled out the two Orange County-based competitors, blaming "the Ameriquests and New Centuries of the world" for pricing loans too low in a bid to retain market share as business slows.

"I've been doing this for 53 years, and I've never seen that situation sustained," Mozilo, 67, said during a conference call with securities analysts. "Eventually they gag on it."]


More...
Registration required