Countrywide, IndyMac Hurt by Reports

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Reports from two investment firms saying that the Treasury Department’s plan to extend low interest rates will have little effect on the sub-prime mortgage market have put downward pressure on two local lenders.


Countrywide Financial in Calabasas had lost 3.8 percent by mid-day trading. IndyMac Bank in Santa Monica lost nearly 70 cents, or 7.3 percent.


The plan will have little effect on the sub-prime mortgage market, according to reports from two investment firms.


Barclays analysts believe few homeowners will qualify for help under the plan, and many are likely to default on their loans even at the teaser rates. “The sub-prime reset plan, as it currently stands, is unlikely to be a big help,” wrote analysts Ajay Rajadhyaksha and Sharon Greenberg.


Thomas Zimmerman at investment bank UBS thinks most borrowers who could be helped by the plan will work out new loan details even without it. UBS estimates that about 100,000 home mortgages will reset to higher interest rates each month for the next two years.

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