Countrywide Sees Foreclosures Double in December; Loan Funding Remains Flat
Foreclosures at mortgage industry bellwether Countrywide Financial Corp. reached 1.44 percent of unpaid principal balance in December of 2007, the Calabasas, Calif.-based lender said today, doubling its volume from one year ago. Delinquencies also increased, reaching 7.20 percent on a UPB basis -- a stunning jump of 68 basis points in a single month, and up from 4.6 percent one year earlier. Speculation the Countrywide may be headed for bankruptcy reached a fever pitch early yesterday morning, with the stock losing more than a quarter of its value; the lender has strongly denied the rumors, but today's news of increased delinquencies sent the stock tumbling an additional 15 percent to $4.69 as of when this post was published. In a press statement, Countrywide highlighted what it COO and company president David Sambol said were "a number of positive operational trends," including stable loan fundings and slowing prepayment speeds. (Slowing prepayments usually increase the value of mortgage servicing rights, although I've noted in recent commentary that the HOPE NOW program may actually have the unintended side effect of hurting MSR valuations.) Total loan fundings at Countrywide for December were $24 billion, up one percent on a monthly basis; the servicing portfolio reached $1.48 trillion by the end of the year, an increase of $5.8 billion from November. The lender's insurance segment saw strong growth in December, with Countrywide reporting that net earned premiums reached $167 million in December, up 12 percent from November and a jump of 55 percent from December 2006. For more information, visit http://www.countrywide.com. Disclosure: The author owned numerous put option contracts on CFC when this post was originally published.