SUBPRIME FALLOUT

Posted On: January 2008

Countrywide continues slide as foreclosures rise

Late payments and foreclosures rose in December at Countrywide Financial Corp., causing the stock of the nation's biggest mortgage lender to continue its free fall this week.

A day after losing more than a quarter of its market value, shares of the Calabasas, Calif.-based company, which is also the biggest mortgage lender in the Chicago area, closed Wednesday at $5.12, down 35 cents, or 6.4 percent, on the New York Stock Exchange. The stock plummeted 19 percent before rallying.

That decline followed losses of 9 percent Monday and 28 percent Tuesday, when the company, whose stock was trading near $40 about a year ago, denied speculation that it was on the verge of filing for bankruptcy.

Countrywide, which has cut thousands of jobs nationwide and is in the process of laying off 127 workers in Rolling Meadows, said Wednesday that 6.96 percent of the loans in its mortgage-servicing portfolio were delinquent last month, up from 5.02 percent of loans that were overdue in December 2006. And 1.04 percent of the mortgages were pending foreclosure, up from 0.65 percent.

Cook County is among the markets in which it has seen a spike. Nearly 2,000 Countrywide loans went into foreclosure in the county in 2007, nearly double the 1,024 that went into foreclosure in 2006, according to Record Information Services, a Kaneville-based tracker of foreclosures and other public data.

Countrywide is the biggest mortgage lender in Cook County, according to the non-profit Woodstock Institute. It originated 15,000 mortgages in the county in 2006, said Woodstock research director Geoff Smith. Next was Chase, with more than 10,000 mortgage originations, he said.

David Olson, of Columbia, Md.-based Wholesale Access Mortgage Research & Consulting Inc., said Wednesday that Countrywide's prospects are "not very good," particularly if the economy enters a recession.

"They were touch-and-go without a recession," he said. "I have a hard time seeing how they survive without a lot of help."

Others believe that Countrywide could be on a collision course with bankruptcy.

"With the mortgage market and economy continuing to slide, it's likely Countrywide will suffer intolerable losses," Mike Larson, an analyst with Jupiter, Fla.-based Weiss Research, said in a report Wednesday. "In the absence of extraordinary intervention, it could be difficult for Countrywide to avoid failure."

The company lost $1.2 billion in the third quarter, but has said it expects to be profitable in the fourth quarter and in 2008. Its fourth-quarter results are scheduled to be released Jan. 29.

Countrywide also reported Wednesday that the value of loans being processed totaled $35.1 billion in December, down from $57.2 billion in December 2006. Average daily mortgage applications decreased from November, but Countrywide attributed that to a seasonal decline.

The report, however, showed some positive trends.

Loan fundings rose 1 percent from the previous month, ahead of internal forecasts.

The company's banking operations had assets of $113 billion at the end of December, compared with $83 billion at the end of 2006.

Its mortgage-servicing portfolio continued to grow, reaching $1.48 trillion in December 2007, up $5.4 billion from November and $178 billion from December 2006.

"Management is pleased with the progress we have made in positioning the company to navigate the current challenging environment," President David Sambol said in a statement.

By Becky Yerak Tribune Staff Reporter
Chicago Tribune  

Posted On: January 2008

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