| NEW YORK
NEW YORK Countrywide Financial Corp CFC.N,
the largest U.S. mortgage lender, said on Wednesday that
foreclosures and late payments rose in December to the highest
on record, sending its shares tumbling for a second day to
their lowest in nearly 13 years.
The shares closed down 43 cents, or 7.7 percent, at $5.12,
bringing their two-day decline to 33 percent. They earlier fell
to $4.43, a level not seen since April 1995.
Analysts attributed Wednesday's drop to deteriorating
credit quality reflected in Countrywide's monthly operating
report, and renewed concern the lender might not survive the
housing crunch and could seek bankruptcy protection. On
Tuesday, Countrywide rejected bankruptcy rumors.
"Virtually no one in the market is willing to cast a vote
of confidence in this company's ability to extricate itself
from its current heap of trouble," options analyst Rebecca
Engmann Darst of Interactive Brokers Group wrote in a report.
Like many rivals, Calabasas, California-based Countrywide
has been hurt by falling home prices, rising defaults and tight
It now primarily makes smaller home loans considered less
likely to default, after losing $1.2 billion in the third
quarter. Chief Executive Angelo Mozilo has called the nation's
housing slump the worst since the Great Depression.
Countrywide said the foreclosure rate for the 9.03 million
mortgages on which it collects and processes payments doubled
to 1.44 percent from 0.70 percent a year earlier, and rose from
November's 1.28 percent. The delinquency rate rose to 7.20
percent of unpaid balances from 4.60 percent a year earlier.
December's rates were the highest since 2002, the earliest
period for which data are available. Countrywide's mortgage
servicing portfolio grew to $1.48 trillion, as homeowners
prepaid fewer loans.
"The extent of the deterioration is a surprise and does not
bode well for the fourth-quarter results of companies with
mortgage credit exposure that may have to further add to
reserves," wrote Lehman Brothers Inc. analyst Bruce Harting.
Among shares of other mortgage lenders, IndyMac Bancorp Inc
IMB.N slid 96 cents, or 17 percent, to $4.70. Washington
Mutual Inc (WM.N) fell 39 cents, or 3.1 percent, to $12.34,
after being down as much as 15.7 percent earlier in the day.
Washington Mutual and IndyMac have also suffered mounting
credit losses and stopped making many home loans now considered
too risky. Neither was immediately available for comment.
Countrywide said it funded $23.4 billion of home loans in
December, up 1 percent from November, though average daily loan
applications fell 17 percent to $1.54 billion.
Total mortgage lending fell 44 percent from $41.7 billion a
year earlier. Subprime loans sank to $6 million from $3.74
Countrywide also said its banking unit ended the year with
$61 billion of deposits, up $2.3 billion from November. The
company is offering yields above 5 percent on some accounts to
attract cash after credit markets seized up.
"Management is pleased with the progress we have made in
positioning the company to navigate the current challenging
environment," Chief Operating Officer David Sambol said.
Still, analysts have said Countrywide, which in August got
a $2 billion infusion from Bank of America Corp (BAC.N), may
need more capital, perhaps from outside the United States.
"Rumors of bankruptcy are still surrounding Countrywide,"
said William Lefkowitz, options strategist at brokerage firm
Countrywide also said it has cut 10,986 jobs since the end
of July, achieving its goal of eliminating 10,000 to 12,000
jobs by the end of 2007. The company said it ended December
with 50,600 employees, down from 61,586 in July.
(Additional reporting by Doris Frankel in Chicago; Editing
by Derek Caney, Dave Zimmerman, Gary Hill)