Quick Take: Bad Behavior at Countrywide

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The New York Times published a great piece Sunday, describing the bad behavior at easy-finance king, Countrywide Financial (NYSE: CFC). Given that the Times documents some decidedly skuzzy-looking policies designed to extract maximum profits from borrowers, it's no surprise that stock-dumping CEO extraordinaire, Angelo Mozilo, refused to comment.  

Among the reported transgressions: keeping borrower cash holdings out of the subprime system software in order to bias the sales pitch toward pricier loans. Charging exorbitant document delivery fees. Oh, and something the IRS might like to look into: Refusing to send contract loan writers 1099 forms.

All in all, it reads to me like a short-sighted playbook for greed, and explains a lot of the pain in the current housing market. The Times sums up the fallout: As of June 30, almost one in four subprime loans that Countrywide services was delinquent, up from 15% in the same period last year, according to company filings. Almost 10% were delinquent by 90 days or more, compared with last year's rate of 5.35%.

Is it any wonder that Countrywide needed to hit up Bank of America (NYSE: BAC) for emergency funding last week? Does anyone out there really think that Mozilo believes in the long-term health of this company, when he's eliminated all but a less-than-a-quarter-percent stake in the firm he founded? Anyone think the worst is over?

If so, I've got a loan to offer you. Don't worry; it'll be the best loan for you. Really.

At the time of publication, Seth Jayson, a top-10 CAPS player, had no positions in any company mentioned here. See his latest CAPS blog commentary here. View his stock holdings and Fool profile here. Bank of America is an Income Investor recommendation. Fool rules are here.