Foreclosures doubled to 1.44 percent of unpaid principal in December from 0.7 percent a year earlier at the company's unit that handles billing and processing, Countrywide said in a statement today. Late payments advanced to 7.2 percent of unpaid balances from 4.6 percent.
Countrywide fell 7.7 percent today after losing more than a quarter of its market value yesterday, when the company denied speculation it will file for bankruptcy. Declining home sales and rising defaults pushed Countrywide down 79 percent last year, and Chief Executive Officer Angelo Mozilo has called the housing market the worst since the Great Depression.
``It appears that the housing trends in 2008 will look a lot like 2007, so Countrywide will remain under a lot of stress,'' said Tom Atteberry, a money manager in Los Angeles at First Pacific Advisors LLC, in an interview yesterday. ``What they are left with is a pretty low-margin business.''
Countrywide fell to $5.05 in 10:10 a.m. New York Stock Exchange composite trading. The stock fell 28 percent yesterday to $5.47, its biggest decline since Black Monday in October 1987. Washington Mutual Inc., the biggest U.S. savings and loan, dropped as much as 15 percent, and IndyMac Bancorp Inc., the second-biggest independent mortgage company, lost 11 percent.
Investors controlling 134.4 million Countrywide shares were betting on a decline as of Dec. 31, according to data compiled by Bloomberg. The so-called short interest is about 4.7 times the company's average daily trading volume and about 23 percent of the company's shares available to the public.
Bad Loans
Mortgages funded rose 1 percent from November, and fell 45 percent from year-earlier levels, according to the Countrywide statement. New loans in December totaled $24 billion.
The company charges fees to owners of the mortgages in its $1.5 trillion servicing portfolio for performing the administrative tasks. Borrowers aren't prepaying loans as quickly, the company said, which means a longer stream of earnings for Countrywide and an increase in the value of the servicing rights.
``Our fourth quarter ended with a number of positive operational trends,'' President David Sambol said today in the statement from the Calabasas, California-based company. ``Although average daily mortgage loan applications and the pipeline of mortgage loans-in-process decreased from November, this reflected a seasonal decline typically seen this time of year.''
Subprime Loans
Countrywide made $6 million in subprime loans in December, down from $3.7 billion a year earlier, reflecting its tighter standards for lending and the inability to sell so-called non- conforming loans to investors in the secondary market.
While the change ``has reduced balance sheet risk caused by its non-conforming originations, the dramatic decline in Countrywide's earnings power this transition has caused has kept CFC's creditors nervous about the company's liquidity,'' Lehman Brothers analyst Bruce Harting said in a report yesterday.
A telephone call to Countrywide's media office was not immediately returned. Mozilo said in October that the company expects to be profitable in the fourth quarter and in 2008.
Countrywide probably is seeking additional capital to shore up its credit ratings, Atteberry said.
Bank of America invested $2 billion in Countrywide in August, buying preferred shares that are convertible at $18 and pay a 7.25 percent dividend. If Bank of America converted all of the original stake to Countrywide's stock at the current price, the bank might face a loss of more than $1.3 billion, or about 70 percent, excluding dividends and the value of the conversion rights.
Countrywide's bank attracted a net $2.3 billion in deposits in December, ending the year at $61 billion. The bank is boosting interest rates to help attract deposits, while borrowing more than $50 billion from the Federal Home Loan Bank system.
