The customers did not have leverage because they would not normally have been able to secure the loans and there was no supplier issue because Countrywide was the supplier. The governments new rules dictated offering more subprime loans, and socially the company was also pushed to provide loans to more people.
To make matters worse, some securities were backed by these loans, and when the people started to default on their mortgages, these securities also took a dive.
Areas of Concern The largest area of concern was the open fraud, and the fact that employees who were willing to blow the whistle and did, in fact, talk to higher ups were silenced by demotion of termination.
Opportunities Now the company has great opportunity to become a better lender because it is possible to learn from the mistakes of the past. Situation Analysis financial part Net Profit Margin in the fourth quarter ofbefore the crisis, was 4. Goals and Ambitions The primary goal of the company was to make money.
In the end, they held more basically unsecured mortgages than any other company. Assessment Countrywide was already one of the largest mortgage lenders in the world when the push came to make more of these types of investments. These types of loans are called subprime because the people who want the loan do not qualify under the normal rules.
Internally, the company was financially sound at this time, and they had a group of lending associates who were willing to do what it took to pass the loans. Market Conditions Almost everyone else in the market was doing the same as Countrywide; it is just that Countrywide had more to lose because they held more suspect mortgages than anyone else with the possible exception of Fannie and Freddie, but they were government backed mortgage houses so they do not count.
Countrywide was one of a number of corporations but the one with the largest number of questionable mortgages which followed the lead of a then recent push by the government to provide incentives to companies that offered a greater number of people home loans.
The researcher or manager uses this data to determine what the internal and external environments of an organization. Because they were so large and held so many subprime mortgages they did enjoy a competitive advantage.
Everyone else was doing it, the government endorsed the practice, so Countrywide executives used these new fraudulent ethics to make more money for themselves and their shareholders.
The model became one of ethical relativism. This greed so blinded the managers of the firm that they were willing to take on more of the subprime mortgages because the more mortgages they owned, the more money was being paid back to them. The problem came when many of these people stopped paying.
There was a lot of competitive intensity in the business at that time. There was a threat of substitute products because any lender could come up with a new loophole to exploit. Weaknesses Countrywide was weak in that it was too large, and had too much money invested in what turned out to be bad loans.
Because of this, many people had to default in these loans and Countrywide could not get its money back. Competitive Strategy The competitive strategy was to absorb more loans than anyone else did.
These figures show the devastation caused by the poor judgment of Countrywide and how quickly those bad loans reversed their fortunes. The greatest competitive threat was the fact that other lenders were just as anxious to make the loans as Countrywide was.
The fact that the company was willing to actively engage in fraud helped them to acquire more of these types of mortgages than anyone else. An ARM usually last for a five-year period after which the lender can require the individual to get a new loan, continue in the same agreement, or make them pay a balloon payment.
Competitive Advantage Countrywide was one of the largest lenders in the United States. In the case of Countrywide, externally a PEST analysis is a good tool here the company was encouraged to offer the types of mortgages that it did.
Many banks were in on the practice so the market for these types of loans was good. Instead of sticking to the mission and values that made the company what it was, the managers during this period focused on what the market was doing and did what everyone else did. This oversight and active fraud led to the mortgage debacle.
Problem Statement Countrywide Financial lost their ethical stance when they encouraged companywide fraud and kept the bulk of their actions from securities and exchange commission auditors and their own company fraud monitors. This caused many banks serious trouble because they had a great amount of their assets tied up in these securities.
SWOT Analysis Strengths The greatest strength that the company had was its long standing in the market and the good reputation that they had.
This paper looks at what happened during the crisis, the steps and missteps that Countrywide made and what became of the company. This meant that consumers knew that if they wanted a mortgage product, they were better able to get one from Countrywide than anyone else.
The gathering of a large amount of bad loans may have been couched in the idea of social responsibility, but it was actually antithetical to that idea. Alternative The alternative to the practices that were rampant in the company at the time was that they could have followed an ethic of social responsibility.
During this period, Countrywide was willing to go to any lengths to get people, qualified or not, into a home. The company encouraged this activity also. Another issue is the relativistic ethical structure.
Threats The threat was that the fraud that Countrywide was perpetrating would be found out it wasand that the loans that they offered would cause them to collapse under the weight of bad mortgages which they did. The reason that the government had passed the regulations which demanded that more people in lower income brackets be able to purchase homes was a good thought morally it seemedbut it did not make business sense.was a significant contributor to the subprime Countrywide Financial Corporation and the Subprime Mortgage Debacle Ronald W.
Eastburn Case Western Reserve University Angelo Mozilo, founder and Chairman of Case 15Countrywide Financial Corporation and the Subprime Mortgage Debacle underserved geographic sectors.
An ancillary. Countrywide Financial Corporation and the Subprime Mortgage Debacle Inthe world discovered that Countrywide Financial and other lenders had been promoting mortgages practices that were not impractical, they were criminal. Countrywide Financial Corporation and the Subprime Mortgage Debacle Ronald W.
Eastburn Case Western Reserve University Angelo Mozilo, founder and Chairman of Countrywide Financial Corporation, was the driving force behind the company’s efforts to become the largest real estate mortgage originator in the United States and, according to some.
How the roof fell in on Countrywide. CEO and co-founder Angelo Mozilo saw a subprime mortgage crisis coming — for everyone except his own company. Countrywide Financial, co-founded in. Mar 06, · Commentary and archival information about the Countrywide Financial Corporation from The New York Times.
Countrywide Mortgage Devastation Lingers as Ex-Chief Moves On. the Subprime Mortgage Debacle Transcript of Countrywide Financial Corporation. Countrywide Financial Salient Points General Environment Industry Analysis Competitor Analysis Financial Analysis Marketing Analysis Management Analysis SWOT Analysis Vision Statement Strategic Alernatives Alternative Evaluation Alernative Choice Implementation.Download