More trouble for Countrywide as loan delinquencies surge

LOS ANGELES — Countrywide Financial's shares tumbled for the second day today after the nation's largest mortgage lender said the delinquency and foreclosure rate of home loans in its portfolio surged in December.

The news drove shares down more than 20 percent in early trading in New York, before they recovered to close off 6.4 percent for the day.

The company said some 6.96 percent of the loans in its servicing portfolio were delinquent last month, up from 5.02 percent in December 2006.

About 1.04 percent of the mortgage loans were pending foreclosure, up from 0.65 percent.

Meanwhile, loan fundings during December rose 1 percent from the previous month, ahead of internal forecasts.

The company said it funded $24 billion in loans during the month, giving it a total of $69 billion for the fourth quarter.

Countrywide also reported that its banking operations had assets of $113 billion at the end of December, up from $83 billion at the end of November.

Management pointed to the slight increase in loan fundings and rising bank deposits as evidence the company was heading in the right direction.

"Our fourth quarter ended with a number of positive operational trends," Countrywide President and Chief Operating Officer David Sambol said in a statement. "Management is pleased with the progress we have made in positioning the company to navigate the current challenging environment."

But the company's shares fell more than 20 percent in early trading today before paring their loss to 35 cents, or 6.4 percent, closing at $5.12. Today's drop followed a loss of $2.17, or 28.4 percent, on Tuesday.

Calabasas, Calif.-based Countrywide previously reported a $1.2 billion loss for the third quarter of last year, but management has forecast a profitable fourth quarter and 2008.

Analysts polled by Thomson Financial are estimating Countrywide will post a fourth-quarter profit of 12 cents a share on revenue of $1.9 billion.

The company is due to report its fourth-quarter financial results Jan. 29.

The company said today that mortgage applications waiting to be processed as of Dec. 31 were worth about $35 billion, down from $57.2 billion in the year-ago period.

In all, the lender originated 116,577 home loans in December, down from 212,566 in the same period of the previous year.

The company continued to shift away from risky subprime loans, with fundings totaling $6 million, down from $3.73 billion in December 2006. Subprime borrowers often have shaky credit repayment histories.

Home-equity loan originations also declined last month to $1.26 billion, down 61.3 percent from $3.27 billion in the year-ago period.

Countrywide's slate of adjustable rate mortgages fell by 75 percent, to $3.68 billion from $15.22 billion a year earlier.

As of Dec. 31, the lender's mortgage loan servicing portfolio included about 9 million loans valued at $1.47 trillion, up about 14 percent from December of 2006. The company services loans originated by other lenders.