Countrywide foreclosures at record, refinancing up

NEW YORK (Reuters) - Countrywide Financial Corp CFC.N, the largest U.S. mortgage lender, said on Friday foreclosures and late payments rose in January to new records, reflecting the nation's deepening housing and credit crunch.

But the company, which agreed last month to be acquired by Bank of America Corp (BAC.N), also said average daily mortgage application volume surged 72 percent from December and mortgage loans being processed rose 46 percent. This suggests homeowners are taking advantage of lower interest rates to refinance.

Countrywide said the foreclosure rate on the 9.02 million mortgages on which it collects and processes payments rose to 1.48 percent from 0.77 percent a year earlier, and from December's 1.44 percent.

Delinquencies rose to 7.47 percent of unpaid balances from 4.32 percent a year earlier, and 7.20 percent in December. Countrywide services $1.48 trillion of home loans.

Countrywide said it funded $21.89 billion of home loans in January, down 41 percent from $37.11 billion a year earlier. Fundings fell 6 percent from December's $23.39 billion, as a 5 percent increase in refinancings offset a 24 percent drop in new home financings. Subprime loan volume fell to zero.

Average daily loan applications totaled $2.64 billion, down 6 percent from $2.82 billion a year earlier, but up from about $1.54 billion in December. The pipeline of loans-in-process rose to $51.04 billion from December's $35.06 billion.

"Credit data continues to be a source of significant concern," wrote Lehman Brothers Inc analyst Bruce Harting, "(while) the application volume is another data point suggesting we could be on the verge of a modest refi-wave."

Harting said an increase in refinancings could benefit other companies highly dependent on mortgage volume, including Washington Mutual Inc (WM.N) and IndyMac Bancorp Inc IMB.N, and title insurers Fidelity National Financial Inc (FNF.N) and First American Corp (FAF.N).

Countrywide also cut 486 jobs in January, ending the month with 50,114 employees. It has reduced its work force by 11,472, or 19 percent, since July.

The all-stock purchase of Countrywide valued the company on Thursday at about $4.4 billion, or $7.70 per share.

Countrywide lost $704 million in 2007, and according to a Feb 13 regulatory filing believed it might have faced "financial distress" had it not agreed to the takeover.

The hedge fund SRM Global, which said it owns 5.48 percent of Countrywide shares, has said it opposes the merger, saying the lender is worth more.

Shares of Countrywide rose 1 cent to $6.93 in morning trading on the New York Stock Exchange.

(Editing by Dave Zimmerman)