Countrywide: Subprime Fundings Drop 17 Percent in 4th Quarter, Foreclosures Up Nearly 50 Percent

Perhaps reflecting increasing wariness about troubles in the the subprime credit sector, Countrywide said today that nonprime funding activity during the fourth quarter of 2006 had dropped 17 percent from one year ago, falling to just $10 billion dollars of the $122 billion in loan volume funded by the company during the quarter. Total mortgage loan fundings for the fourth quarter were off 9 percent from one year ago, Countrywide said, but were the highest quarterly volume for 2006. December’s fundings were reported at $42 billion, down 7 percent from December 2005.

Countrywide’s portfolio continued to see steady growth during December, reaching $1.3 trillion. The current servicing portfolio is up 17 percent from one year ago, in spite of slowing purchase volume at the nation’s largest loan servicer. Monthly purchase volume of $17 billion was down 20 percent from December 2005, and a fourth quarter purchase volume of $51 billion declined 18 percent from the same prior year quarter. In addition to a drop in subprime activity, Countrywide also reported a drop in home equity and pay-option loan fundings during the fourth quarter. Home equity loan fundings were down 19 percent from December 2005 to $3.3 billion at December 2006, while fourth quarter 2006 home equity funding volume of $11 billion was a drop of 5 percent. Pay-option funding dropped to $10 billion during the fourth quarter, totalling $64 billion in fundings for the year; the company funded $95 billion in pay-option loans during 2005. Portfolio delinquencies and pending foreclosures continued to rise. Pending foreclosures reached 0.65 percent of the servicing portfolio, an increase of 47 percent from December 2005, while portfolio delinquencies reached 5.02 percent of the servicing portfolio. Delinquencies represented 4.61 of the servicing portfolio during December 2005. “Despite a transitional and challenging mortgage market throughout 2006, Countrywide produced strong operational results for the year,” said Angelo R. Mozilo, Chairman and Chief Executive Officer. “While the 2006 mortgage market reflected excess capacity and strong competition, Countrywide’s total mortgage loan funding volume of $463 billion for the year was down less than 7 percent from the record level set in 2005.”

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