Countrywide Financial denies bankruptcy rumors
NEW YORK (Reuters) - Countrywide Financial Corp CFC.N on Tuesday denied market speculation it might seek bankruptcy protection, after shares of the largest U.S. mortgage lender slid to their lowest level in nearly eight years.
"There is no substance to the rumor that Countrywide is planning to file for bankruptcy, and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the company," Countrywide said in a statement.
Countrywide shares pared earlier losses following the statement. In afternoon trading, the stock was down $1.05, or 13.7 percent, at $6.59 on the New York Stock Exchange. It had earlier fallen nearly 25 percent to $5.76, its lowest level since March 2000.
Like many U.S. mortgage lenders, Countrywide has struggled with the nation's housing slump.
Borrower defaults have soared as falling home prices and tighter credit markets led it stop making many of its more profitable home loans.
The refusal of many investors to buy all but the safest mortgage has led to write-downs of loans on its books.
On October 26, Calabasas, California-based Countrywide posted a $1.2 billion third-quarter loss, but said it expected to be profitable in the fourth quarter.
Chief Executive Angelo Mozilo said at the time he also expected Countrywide to survive the credit crunch. Mozilo co-founded Countrywide in 1969.
Bank of America Corp (BAC.N) injected $2 billion into Countrywide last August. Countrywide later set plans to lay off as many as 12,000 employees, or one-fifth of its workforce.
Countrywide is expected to disclose December mortgage lending activity as soon as Friday, and to report fourth-quarter results later this month.
(Reporting by Jonathan Stempel; Additional reporting by Kristina Cooke in New York and Doris Frankel in Chicago; Editing by Toni Reinhold)
