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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Jim McMannis who wrote (91803)	10/11/2007 2:12:04 PM
From: Smiling Bob	Read Replies (1) \| Respond to of 306849

These need to be translated to Mandarin and Arabic. What kind of "necessary" steps can CFC possibly take to avoid foreclosing other than taking a loss and reducing the principal to more current values, and then some? That 1.8 % YOY increase in overdue loans is nothing compared to what's coming. -- Countrywide Says Bad Mortgages Rise, New Loans Fall (Update4) By David Mildenberg Enlarge Image/Details Oct. 11 (Bloomberg) -- Countrywide Financial Corp., the largest U.S. mortgage company, said late payments at its servicing unit rose, foreclosures doubled and new loans fell 44 percent as housing sales slowed. Overdue loans as a percentage of unpaid principal increased to 5.85 percent in September from 4.04 percent a year earlier, the company said in a statement. Foreclosures climbed to 1.27 percent from 0.51 percent. Mortgages funded by the Calabasas, California-based company last month declined to $21 billion. Countrywide's servicing business, which does billing and collections, serves as a barometer for current conditions in the mortgage industry. The company's report adds to evidence that the worst U.S. housing slump in 16 years is getting deeper. Nationwide foreclosures set a record in the second quarter, according to the Mortgage Bankers Association, and doubled in September from a year earlier, RealtyTrac Inc. reported today. ``The whole mortgage lending market is tightening very dramatically,'' Gary Gordon, an analyst in New York at Portales Partners. ``Home prices are falling, people have over-borrowed and employment growth is slowing. I'm convinced that we'll see that for the next three years.'' Countrywide fell 15 cents to $18.65 at 12:41 p.m. in New York Stock Exchange composite trading. The company's shares have lost 56 percent this year. Late Payments Delinquencies rose 0.8 percentage points in September from the preceding month, the company said, with about half the increase tied to the fact that there were four fewer business days than in August. Countrywide's servicing portfolio of $1.46 trillion, or almost 15 percent of total U.S. home-loan debt, includes mortgages owned by other companies and investors, with Countrywide handling the paperwork and record-keeping. ``The company is continuing to take the necessary steps to assist borrowers with foreclosure avoidance and investors with loss mitigation,'' Countrywide President David Sambol said in the statement. Calls to Countrywide's media office weren't immediately returned. Countrywide's rising delinquencies reflect the effects of relatively lax industry-wide credit standards in 2005 and 2006 with more borrowers falling behind on payments within months of receiving home loans, said Keith Gumbinger, vice president of HSH Associates Inc., a mortgage industry research firm in Pompton Plains, New Jersey. ``Everyone expects some percentage of loans to fall over, but the speed in which this is happening caught people by surprise,'' he said. Job Cuts Total employment fell by more than 4,900, or about 8 percent, with most of the reduction among staff that handles new loans, said a report by Moshe Orenbuch at Credit Suisse Group. Countrywide is about halfway to the goal of 12,000 job cuts announced last month, he said in the report, which rates the shares ``outperform.'' Countrywide's delinquency and foreclosure rates are likely to double over the next two years, Gordon said. He still rates Countrywide a ``buy'' because its shares are trading at such a low price relative to the company's net worth. Countrywide's book value, or assets minus its liabilities, could fall ``into the high teens'' from $25 because of write- downs, operating losses and dilution from the recent sale of convertible preferred securities, Jim Shanahan, an analyst in St. Louis at Wachovia Securities Inc., said in a report today. He rates the company ``market perform.'' Countrywide Bank The lender said 89 percent of production in September came through its own bank. That's almost triple year-earlier levels, when the company relied on independent mortgage brokers to originate most of the loans. Assets in Countrywide's bank topped $100 billion, aided by a record inflow of $2.7 billion in the month, the company said. North Carolina's state treasurer has asked the U.S. Securities and Exchange Commission to investigate stock sales made by Countrywide Chief Executive Officer Angelo Mozilo. Mozilo has been selling shares as a part of a previously announced plan to diversify his holdings. Countrywide obtained $12 billion in financing in September to help weather a decline in demand for mortgages and reduced access to the commercial paper market, where the company usually borrows money. Countrywide received a $2 billion investment in August from Bank of America Corp., the second-biggest U.S. bank, to ease a cash shortage. To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net Last Updated: October 11, 2007 13:04 EDT