Soured Loans Soar
At Countrywide
by Lingling Wei
From The Wall Street Journal Online
October 12, 2007
Countrywide Financial Corp., hit hard by this summer's credit storm, said the number of past-due home loans it services soared last month and it funded 44% fewer mortgages amid the continuing housing market slowdown.
As a percentage of unpaid principal balance, delinquent loans jumped to 5.85% in September from 4.04% a year earlier, and foreclosures increased to 1.27% from 0.51%, the nation's largest home mortgage lender reported Thursday.
Its loan-servicing portfolio, including loans made by other lenders and owned by investors, reached $1.46 trillion as of Sept. 30, an increase of 17% from a year earlier.
"The company is continuing to take the necessary steps to assist borrowers with foreclosure avoidance and investors with loss mitigation," Countrywide President David Sambol said. He said about half of the jump in delinquencies last month from August resulted from the fact that there were four fewer business days in September than in the previous month.
Countrywide, of Calabasas, Calif., said it funded $21 billion of mortgages in September, and about 89% of that amount came from its banking unit, reflecting its move to rely on its deposit-taking savings bank to provide funding for lending following its curbed access to the debt markets.
Mr. Sambol said the drop in lending volumes "is reflective of current market conditions and more restrictive underwriting."
Countrywide also continued to cut its loan pipeline, which should lessen the stress on its near-term funding needs. It had $42 billion of in-process loans as of the end of last month, a drop of 35% from a year earlier and of 19% from the previous month.
In the third quarter, Countrywide's total mortgage loan production volume declined 27% from the second quarter and 19% from a year earlier. It also noted that commercial real estate funding volume slid to $242 million in September from $646 million a year earlier.
Shares of Countrywide traded recently at $18.40, down 40 cents, or 2.1%. The stock is trading at about a 30% discount to its book value of around $25 a share.
-- Kathy Shwiff contributed to this report.
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