Freddie Mac (FRE) officially posted a loss of $480 million dollars, posting 2006 EPS of $2.84 while the analysts were expecting $5.19 to $6.00. This further points to weakness in the housing industry and that it is not isolated to the subprime mortgage market.
Countrywide (CFC) and Indymac (NDE) were officially sued for fraud today, which promises to be the long string of law suits for breach of "fiduciary" duties by a lender. Interestingly Sandor Samuels also agreed that CFC has no "fiduciary" duties to the borrower. Things are getting interesting. I am awaiting more law suits of this type, including class action law suits by the share holders which should lead to SEC criminal probe of this company with CEO Angelo Mozilo at the center of this suit. Enron memories are so bittersweet!
Existing Home Sales numbers are due 10:00 AM EST with estimates at 6.3 million. I think we will see a drastic decline in this area, further boosting the notion that all is well for the mortgage industry and housing industry. No bottom is near. I do not think that Angelo Mozilo's clown act with Cramer last night to pump up his stock will work and it will be further exposed that Mazilo and Cramer is complicit in a pump and dump scheme. I do not think Countrywide can continue to grow as promised with declining home sales.
All of this means that we should see a down day for the home builders and mortgage lenders of every type today. I wonder what the new shoe to drop will be.
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