Markets, Mortgage Lenders
AP - Shares of several mortgage lenders fell Tuesday after a report showed home prices suffered their steepest decline in more than two decades last quarter, but battered Countrywide Financial Corp.’s stock rose on optimistic news from the company.
The Standard & Poor’s/Case-Shiller Home Price Indices, which track home values in metropolitan areas, sank 1.7 percent in the third quarter from the second quarter. That was the biggest decline in the index’s 21-year history.
“There is no real positive news in today’s data,” Robert J. Shiller, chief economist at MacroMarkets LLC, said in a statement.
Dragged down by overbuilding and an end to speculative buying, home prices are in their third year of a slump that has stung furniture manufacturers, home-improvement retailers and mortgage lenders.
The housing slump matters for mortgage lenders because home values are a principal determinant of the quality of mortgage credit.
When home prices are high, strapped homeowners can tap the equity in their homes to borrow more money and pay their bills. When home prices sink, homeowners lose both the incentive and the means to repay mortgages.
Shares of Thornburg Mortgage Inc. lost 1 cents to $8.77. Shares of Delta Financial Corp. fell 7 cents, or 4 percent, to $1.69. Shares of NovaStar Financial Inc. dropped 1 cent to $1.15.
Shares of Countrywide Financial Corp. climbed 36 cents, or 4.2 percent, to $9. The managing director of the Calabasas, California-based lender’s investor-relations department said in a presentation Tuesday that the company does not expect the losses at Freddie Mac and Fannie Mae to affect Countrywide’s ability to finance loans.
After the subprime shakeout, Countrywide refocused its business on issuing loans the company could sell to government agencies. However, Fannie Mae and Freddie Mac _ government-chartered companies that buy mortgage loans from lenders _ lost a combined $3.5 billion in the third quarter.
Shares of IndyMac Bancorp rose 18 cents, or 2.3 percent, to $8.