Countrywide Overdue Mortgages Increase to 7.4pc
February 15, 2008 - Countrywide Financial Corp., the biggest U.S. mortgage lender, said late loans were at their highest level in at least six years during January, adding to evidence that the U.S. housing slump is getting deeper.
Overdue loans rose to 7.47 percent of unpaid principal balances from 7.2 percent in December and 4.32 percent in January 2007, according to a Countrywide statement today. Foreclosures advanced to 1.48 percent in January, also a six- year high, from 1.44 percent in December and 0.77 percent a year earlier.
Bank of America Corp. agreed to buy Countrywide in January for about $4 billion after the lender lost more than 80 percent of its value because of falling home prices and rising defaults. Treasury Secretary Henry Paulson and lenders including Citigroup Inc. and Bank of America announced plans this month for a 30-day freeze on some foreclosures, which are running at record levels amid the worst U.S. housing market in 26 years.
“In some bubble markets in California and Florida, we’re going to see another 20 percent to 25 percent decline in home prices, which is going to continue to drive delinquencies,” said David Lykken of Mortgage Banking Services, an Austin, Texas-based consulting firm.
The value of home loans extended to borrowers declined 6 percent to $22 billion, Countrywide said. Monthly loans, which set a record at $53 billion in August 2005, have averaged less than half that amount for the past five months. The company issued $2.8 billion in adjustable-rate mortgages last month, down from $13.7 billion a year earlier.
New Bills
Payments on about $460 billion of adjustable-rate mortgages nationwide are scheduled to be repriced this year, with an additional $420 billion expected for 2011, according to New York-based analysts at Citigroup Inc.
The data on late payments and foreclosures are measured as a percentage of the unpaid principal at the company’s unit that handles billing and processing. Some of the 9 million loans at the so-called servicing unit are held by other companies and investors.
Countrywide made no subprime loans in January, compared with $2.9 billion a year earlier, a sign of both the company’s stricter lending standards and lack of demand for those mortgages to back securities. Subprime loans go to people with the weakest credit records and have the highest default rate.
Countrywide’s own bank ended January with $111 billion in assets, down from $113 billion in December. The bank boosted interest rates last year to help attract deposits that can be used to fund new mortgages.
A telephone call to Countrywide’s media office wasn’t immediately returned. Countrywide rose 1 cent to $6.93 in New York Stock Exchange composite trading.
Countrywide’s Overdue Mortgages Increase to 7.47%
By David Mildenberg | Bloomberg