Schumer Urges Review of Countrywide Financial Collateral
Schumer Urges Review of Countrywide Financial Collateral
Senator Charles Schumer has urged the regulator of the Federal Home Loan Banks to undertake a special review of the loans that Countrywide Bank has pledged to collateralize $51 billion in advances from the FHLBank of Atlanta.
The thrift subsidiary of Countrywide Finance increased its advance borrowings in the third quarter by $28.2 billion, up nearly 80% from those of the previous quarter.
In a letter to the Federal Housing Finance Board, Schumer urged the regulator to “probe” the underlying risk of Countrywide’s collateral, which includes payment option mortgages.
The senator said in a CNBC-TV interview that he has concerns about the Atlanta FHLBank’s ability to assess the risk of Countrywide’s collateral. “At a time when Countrywide’s mortgage portfolio is deteriorating, the Federal Home Loan Bank’s exposure to Countrywide poses an unreasonable risk,” the Senate Banking Committee member said.
A Finance Board spokesman said the agency would “respond to Senator Schumer,” but declined to comment further.
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