Countrywide CEO Bullish, Asks Government to Do More
Countrywide Chairman and CEO Angelo Mozilo delivered a bullish outlook Tuesday for his company as it grapples with the ongoing housing downturn.
However, he called on the government to do more to ease the credit crunch and help borrowers in distress avoid foreclosure.
"It is imperative that liquidity return to the mortgage market, and that the tide be turned in order to stabilize home prices," Mozilo said in his keynote speech at an investment conference hosted by Bank of America in San Francisco.
"A failure to do so will not only imperil the financial lives of hard-working American families, but will inevitably impact our broader economy," he said.
His comments came shortly after the Federal Reserve lowered interest rates by a half-point. Mortgage lenders and Wall Street have been lobbying hard for the move.
Mozilo acknowledged the Fed's action in his speech, which was broadcast on the Internet. He said the decision showed the Fed recognizes the importance of home financing.
The Fed's cut reduced its federal funds rate to 4.75%.
Mozilo said Countrywide finds itself in "a difficult environment" -- a housing slump that is among the worst in years.
Yet he struck a confident note, saying he was "very bullish" on Countrywide's future.
"We are working hard to come out stronger in the long run, just as we have often done in the past," he said.
Delinquencies of subprime loans to borrowers with shaky credit have increased, he said, but 80% of Countrywide's subprime loans were current and less than 4% were in foreclosure as of June 30.
He also said the company expected to boost efforts to help borrowers avoid foreclosures.
Mozilo repeated called for lifting portfolio and loan limits on government-sponsored operations such as Fannie Mae , Freddie Mac and other federal home loan banks that buy home loans from other mortgage banks.
Struggling through Housing Downturn
He suggested the loan limits should either be pegged on a formula related to the median home sale price by region or should be broadly increased to $850,000.
Currently, the limit is $417,000, far below the median sale price in expansive states such as California.
"Americans are faced with curtailment of income and declining home prices, and the fact that they cannot refinance or sell a home is exacerbating the delinquency picture," he said.
Calabasas-based Countrywide is the nation's largest mortgage lender in terms of volume.
Like other lenders, the company is struggling through the housing market downturn amid a spike in mortgage defaults and foreclosures, particularly among borrowers with subprime loans.
Last month, Countrywide drew down on an $11.5 billion line of credit and raised $2 billion by selling a stake to Bank of America.
Mozilo said Countrywide's banking unit plans to increase retail deposits by adding about 100 financial centers.
Shares of Countrywide rose 61 cents, or about 3%, to close at $19.88 Tuesday.