Countrywide: Satisfying Company Performance Despite Foreclosures?

As share prices of Countrywide Financial Corp.(CFN), the largest mortgage lender in the United States dropped considerably amid apprehensions and fears of bankruptcy ( may succumb to the real estate crisis), the company claimed to issue more loans than expectations in the last quarter of the year. However, among loans the company has serviced, there has been a considerable rise in foreclosures.

On Tuesday the share prices crashed by 27.4 percent despite Calabasas’s (a California based company) denial of rumors that Countrywide was considering filing for bankruptcy. But, with news of assurances from Countrywide itself share prices rose by 6.2 percent from Tuesday’s composite close in pre-market trading.

Countrywide, in its monthly report declares funding $23.4 billion worth of housing loans in December, which was one percent above November figures, but it was far below $41.7 billion dollars made last year. The average of mortgage loan applications received on per day basis dropped by 17 percent to close at $1.54 billion.

In the last quarter the total loans funded was $69.2 billion of which $68.5 billion was in mortgages alone. The company has also retrenched its employees heavily ending the year with 50,600 workers against 61,586 in July 2007, down by 10,986.

Countrywide’s Chief Operating Officer David Sambol says, “management is pleased with the progress we have made in positioning the company to navigate the current challenging environment.”

Chief Executive Angelo Mozilo has confirmed that like their counterparts dealing in real estate loans; even they have suffered losses due to the foreclosure crisis, the escalating delinquent payments and defaults, depreciating house values and the capital market crunch. He admits that the slump in the real estate market has been the most dismal since the time of Great Depression. Many companies apart from Countrywide have felt the effect of the foreclosure crisis, with many facing huge losses due to the sub-prime crisis.

Countrywide data reveals that in December, the 9.03 million mortgages on which payment collections are done by them, the foreclosures and default rate mounted to the highest ever since 2002. It reveals that since November 2006, the awaited foreclosures rate doubled from .70 percent to 1.28 percent this year and crossed 1.44 percent in December.

The delinquencies too increased from 4.6 percent last December to 7.2 percent this year end. Since fewer loans were prepaid, Countrywide’s servicing portfolio of mortgage loans soared to $1.48 trillion in December end.

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