Countrywide Quits Talks on Loan Deal with Pricecostco
Hornblass, Jonathan S., American Banker
Countrywide Credit Industries has turned down a chance to originate home loans to Pricecostco Inc.'s customers.
The Pasadena, Calif., lender said it had been working "night and day" with the nationwide mega-retailer to try to hammer out a lending agreement. But last week the on-again, off-again deal collapsed for good. Pricecostco was courting other lenders at the same time, and Countrywide didn't like it.
The collapse of the deal, and the bad feelings it generated, underscored the growing toughness of negotiations over affinity programs and lender concerns over profitability.
"We are not going to be put into a cast of thousands," said Laura Snow, a Countrywide spokeswoman. "It is just a shame this won't come to fruition."
Ms. Snow said Countrywide had been working on the deal since October. She said Countrywide spent a considerable amount of money during the negotiation process, though she would not say how much.
"We were prepared to pay quite a bit of money to get in with them," she said. "But the fact that they were shopping this deal to other lenders made it unacceptable to us."
She said Prudential Home Mortgage Co., GMAC Mortgage Corp., and GE Capital Mortgage Co. were among those lenders Countrywide understood to have been approached by Pricecostco.
Pricecostco did not return phone calls.
People familiar with the situation said Countrywide would have paid a large upfront fee - perhaps $1 million - for the right to make loans to Pricecostco's 18 million members nationwide.
"It's crazy. It's a nonsensical amount of money," said a prominent lender to trade and professional groups about the potential upfront fee. …