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Pace of Refinancing Picks Up Countrywide

Countrywide Financial, the largest U.S. mortgage lender, said Friday foreclosures and late payments rose in January to new records, reflecting the nation's deepening housing and credit crunch.

AP

But the company , which agreed last month to be acquired by Bank of America , also said average daily mortgage application volume surged 72 percent from December and mortgage loans being processed rose 46 percent. This suggests homeowners are taking advantage of lower interest rates to refinance.

Countrywide said the foreclosure rate on the 9.02 million mortgages on which it collects and processes payments rose to 1.48 percent from 0.77 percent a year earlier, and from December's 1.44 percent.

Delinquencies rose to 7.47 percent of unpaid balances from 4.32 percent a year earlier, and 7.20 percent in December. Countrywide services $1.48 trillion of home loans.

Countrywide said it funded $21.89 billion of home loans in January, down 41 percent from $37.11 billion a year earlier. Fundings fell 6 percent from December's $23.39 billion, as a 5 percent increase in refinancings offset a 24 percent drop in new home financings. Subprime loan volume fell to zero.

Average daily loan applications totaled $2.64 billion, down 6 percent from $2.82 billion a year earlier, but up from about $1.54 billion in December. The pipeline of loans-in-process rose to $51.04 billion from December's $35.06 billion.

"Credit data continues to be a source of significant concern," wrote Lehman Brothers analyst Bruce Harting, "(while) the application volume is another data point suggesting we could be on the verge of a modest refi-wave."

Harting said an increase in refinancings could benefit other companies highly dependent on mortgage volume, including Washington Mutual and IndyMac Bancorp , and title insurers Fidelity National Financial and First American .

Countrywide also cut 486 jobs in January, ending the month with 50,114 employees. It has reduced its work force by 11,472, or 19 percent, since July.

The all-stock purchase of Countrywide valued the company on Thursday at about $4.4 billion, or $7.70 per share. Countrywide lost $704 million in 2007, and according to a Feb 13 regulatory filing believed it might have faced "financial distress" had it not agreed to the takeover.

The hedge fund SRM Global, which said it owns 5.48 percent of Countrywide shares, has said it opposes the merger, saying the lender is worth more.

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.