Countrywide's operational results were released today, showing that the pace of pending foreclosures and the nation's largest lender have continued to increase. Pending foreclosures represented 1.2 percent of unpaid principal balance during August, up an eye-opening 15.4 percent from one month earlier and the largest monthly jump in pending foreclosures in over one year. A 15 percent jump in foreclosure activity in one month is a large move, although HW readers know I prefer to utilize year-over-year comparisons. (Speaking of which, new foreclosures are up 150 percent by that measure in August, after being up 126 percent YoY in July -- so foreclosure velocity is increasing). Delinquencies also registered a new high-water mark, Countrywide said, with 4.90 percent of the overall servicing portfolio reported delinquent as a percentage of unpaid principal balance. The raw number of loans delinquent decreased slightly, indicating that an increasing number of higher-balance loans may be running into problems versus previous months. The mortgage giant's servicing portfolio continued to grow, reaching $1.5 trillion in spite of a 17 percent decrease in loan fundings for the month to $34 billion. I've heard rumors that Countrywide recently obtained servicing rights to a sizeable portion of loans that had been with GMAC Mortgage, which may in part explain the increase. Most of the business press, however, buzzed about Countrywide's disclosure that it had "recently arranged" for $12 billion in secured credit, ostensibly to be used to provide liquidity for future operations. From Bloomberg:
The ability to find new sources of capital "should substantially address funding concerns," a team of Credit Suisse Group analysts led by Moshe Orenbuch wrote in a research note today. They rate the stock "outperform."
While this is really good news, I'd be curious to know what assets are securing the credit line, myself. I'm always leery of vague language surrounding financing agreements that run into the tens of billions of dollars -- especially in this market. The company also said in an SEC filing later today that it needed more time to estimate the financial impact of its announced restructuring effort, which will see the company lay off between 10,000 and 12,000 of its employees.