Schumer Urges Review of Countrywide Collateral

Sen. Charles E. Schumer, D-N.Y., 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 Corp. 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, Sen. 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 Sen. Schumer," but declined to comment further.