Analysts on average expected a loss of $1.65 per share, according to Reuters Estimates.
Results reflected "unprecedented disruptions in the U.S. mortgage market and the global capital markets, as well as continued weakening in the housing market," Chief Executive Angelo Mozilo said in a statement.
Countrywide shares were up $1.82, or 13.9 percent, at $14.89 in morning trading, after earlier rising to $16.30.
Through Thursday, the shares were down 69 percent this year. They have fallen 40 percent since Bank of America on Aug. 22 injected $2 billion to shore up its finances. Scott Silvestri, a bank spokesman, declined Friday to comment.
Third-Quarter was "Earnings Trough"
Countrywide said the third quarter represented an "earnings trough." It projected fourth-quarter profit of 25 cents to 75 cents per share, and a profitable 2008, with a 10 percent to 15 percent return on equity. It also said it has negotiated $18 billion of "highly reliable" new liquidity.
"There was so much negative sentiment that a whiff of anything positive would help the stock," said Stuart Plesser, a Standard & Poor's equity analyst.
"It still has to worry about liquidity, though it has improved. A big concern remains how much it may need to set aside for credit losses in the future. That will depend largely on housing prices."
Calabasas, California-based Countrywide joins many other financial companies to report write-downs for subprime and other mortgages, including Citigroup , Merrill Lynch and Washington Mutual .
To cope with the housing downturn, Countrywide has stopped making many risky loans, and has focused on smaller but less profitable loans that Fannie Mae and Freddie Mac will buy. It has also shifted most lending to its bank unit, allowing it to tap a wider array of funding sources.
S&P credit analysts downgraded Countrywide one notch to "BBB-plus," a low investment grade, citing the weak housing market and potential for more loan losses in 2008.
Pre-tax losses totaled $1.31 billion in mortgage banking, $407 million in banking and $344 million in capital markets.
Insurance operations generated a $150 million profit.
Critics fault Countrywide for being in part responsible for the housing slump by extending credit too readily earlier in the decade, in the pursuit of profit and market share.