Morgan Stanley has downgraded Countrywide Financial, the nation's largest residential originator, to "equal-weight" from "overweight."In a new research report, Morgan analyst Ken Posner notes that despite the downgrade, the investment banker "modestly" increased its price target on Countrywide to $81. At deadline time, the California-based mega-lender/servicer was trading at $68.90, down almost 4%. "With moderate upside and estimates in line with consensus, we no longer see a basis for overweighting the stock relative to the group," Mr. Posner writes. Morgan Stanley says Countrywide has increased its production of niche mortgage products and should perform adequately as long as a price war for loans does not develop. "The mortgage industry appears to be competing rationally, in line with our thesis, even as we head deeper into the refi bust," Mr. Posner says.
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Rejections for mortgage credit outpaced almost every other borrowing category, according to the Federal Reserve Bank of New York.
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Consumer Financial Protection Bureau Director Rohit Chopra said the FICO credit-scoring model has drawbacks in price, predictiveness and market competition, and stakeholders should develop a more open-sourced model that uses artificial intelligence.
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Smaller players face challenges when it comes to mortgage servicing rights, and larger ones have varying motivations, experts at an industry meeting say.
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Amid steady customer growth, USAA's banking arm failed to make the investments necessary to satisfy either its regulators or some decades-long customers. Changes in the executive suite haven't fixed the problems.
November 21