Countrywide slashes jobs as bad loans rise
NEW YORK (Reuters) - Countrywide Financial Corp CFC.N said on Thursday it funded 44 percent fewer mortgage loans in September as it tightened lending standards, while delinquencies increased and foreclosures more than doubled.
The largest U.S. mortgage lender also said it eliminated 4,935 jobs last month, leaving it with 55,932. It has said it plans to cut as many as 12,000 jobs, or 20 percent, by December to cope with a deepening U.S. housing slump.
Separately, North Carolina Treasurer Richard Moore said he asked the U.S. Securities and Exchange Commission to investigate the timing of stock sales over the last year by Countrywide Chief Executive Angelo Mozilo. Many predated the bulk of Countrywide's 56 percent share price decline this year.
In its monthly operating report, Calabasas, California-based Countrywide said mortgage lending fell to $21.2 billion in September from $38.1 billion a year earlier, and fell 39 percent from $35.1 billion in August.
Funding of adjustable-rate loans slid 76 percent from a year earlier, while nonprime loans, including subprime, tumbled 92 percent. The pipeline of unclosed mortgages, an indicator of future activity, fell 20 percent from August to $41.5 billion.
Among loans that Countrywide services, delinquencies as a percentage of unpaid principal rose to 5.85 percent from 4.90 percent in August and 4.04 percent last September.
The rate of pending foreclosures more than doubled to 1.27 percent from 0.51 percent a year earlier, Countrywide said.
Foreclosures nationwide doubled in September from a year earlier, RealtyTrac Inc. said on Thursday.
Countrywide has overhauled its loan practices to focus on smaller but less profitable loans that government-sponsored enterprises Fannie Mae (FNM.N) and Freddie Mac (FRE.N) will buy.
"The magnitude of the actual decline suggests that the GSE eligible market, or at least Countrywide's share of it, is contracting just when Countrywide needs that volume to offset the non-conforming business it is losing," wrote Lehman Brothers Inc. analyst Bruce Harting. "Significant headwinds remain." Harting rates Countrywide "equal weight."
Shares of Countrywide rose 6 cents to $18.86 in morning trading on the New York Stock Exchange. They began the year at
$42.45.
CRITICISM
The company struggled this summer as it lost normal access to short-term credit markets, forcing it in August to draw down an $11.5 billion credit line. Later that month, Bank of America Corp (BAC.N) invested $2 billion, and the following month Countrywide said it obtained $12 billion of financing.
Countrywide said 89 percent of September mortgage loans came through its own bank, up from 31 percent a year earlier. It is reducing reliance on credit markets by funding more loans through the bank, which has a wider array of funding sources. Continued...
