Countrywide Financial Corp. (CFC) said Tuesday morning that losses continued to widen during the first quarter as homeowners faltered at a record pace. The nation's largest lender and servicer said that it lost $893 million, or $1.60 per share, during Q1, compared to $434 million in earnings one year earlier; the net loss during the first quarter was more than double the loss recorded during the fourth quarter. Citing "materially higher credit-related costs," Countrywide said it set aside more than $3 billion for credit-related losses and write-downs during the quarter as delinquencies, defaults and loss severities continued to climb higher. Roughly $1.5 billion of that amount was tied to expected credit losses -- a ten-fold increase from year-ago levels -- and another $456 million was set aside for expected loan buybacks, it said. Rapidly rising delinquencies on home equity loans and so-called rapid amortization on HELOCs also led to hundreds of millions of dollars in losses. Rapid amortization charges were the source of significant concern in Countrywide's fourth quarter results, according to rating agency Moody's Investors Service. The lender took a $704 million charge tied to subordination of its repayment interest on HELOC advances in the fourth quarter; similar charges fell to $154 million during Q1. Origination volume fell 38 percent during the quarter to $73 billion, off 38 percent from one year earlier, as conduit acquisitions essentially ceased and CRE (commercial real estate) fundings dropped 96 percent. Reflecting broader market movement towards FHA-insured originations, Countrywide saw government fundings rise 188 percent to $10.2 billion during Q1, while ARM and home equity funding activity both fell more than 70 percent relative to year-ago funding activity. Despite struggles in originations, Countrywide's substantial servicing portfolio continued to grow, posting 10 percent annual growth and finishing March at $1.48 trillion in volume. Borrowers under duress Delinquencies continued to increase during the first quarter, according to statistics in Countrywide's quarterly report with the Securities and Exchange Commission. A stunning 35.9 percent of all subprime loans serviced were recorded as delinquent by the end of March; 21 percent of the total were 90 or more days in arrears, including 11.6 percent of subprime loans classified as held for investment. Prime home equity loans also saw DQs ratchet up to 8.29 percent from 3.77 percent one year earlier -- underscoring the duress now facing many prime borrowers, given that the HELs on the books at Countrywide boast an average CLTV of 84 percent and average FICO of 727. But perhaps the most surprising delinquency statistic of all was a stark jump in prime, conventional firsts that appear to have hit a wall during the first three months of 2008. Countrywide said that 6.48 percent of more traditional borrowers were delinquent during March, with 3.19 percent 90 or more days in arrears. That's a jump of 127 percent in conventional first-lien DQs from one year ago, and a rise of nearly 13 percent in just one quarter. It also appears that once they get there, more prime borrowers aren't getting out of delinquency: the number of severe delinquencies within prime firsts alone rose nearly 40 percent between December and March. For more information, visit http://www.countrywide.com. Disclosure: The author was long CFC when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.