Subprime

People are still not taking this seriously. Here is a summary of Countrywide's (CFC) latest financial data. My quick math tells me that Countrywide should be down 20%, not 2%.

They have $1.3 trillion in loans. 9% of that is subprime. That leaves $117 billion. 19% of those accounts are suffering from late payments. That leaves $22 billion in bad accounts. Bad accounts typically lose 20%. That equals $4 billion. CFC's market cap is $22 billion, so there's your 20%

(Obviously, the quick math is flawed. Among other things, this doesn't take into account what portion of the mortgage is paid off, so it assumes a worst case scenario. However, it should be pretty close, since the most recent mortgages are in the worst shape. It also doesn't say anything about how many of the late loans were resold to investors in the last six months. This is the time period that investors have to return any bad loans to Countrwide.)

The acceleration of deterioration in loans last year shows an exponential increase. Delinquent loans went from 15.2% to 16.9% (1.7%) in the first half of last year. In the third quarter alone, the increase was 2.1%. Fourth quarter numbers aren't out yet.