U.S. News

Countrywide Says 2006 Subprime Defaults Could Set Record

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Countrywide Financial's subprime mortgage defaults for 2006 loans may exceed the company's highest on record, a company executive told a government panel examining mortgage lending.

Countrywide's "worst single origination year was 2000, for which the cumulative foreclosure rate was 9.89%," Sandor Samuels, the company's executive managing director, said in prepared remarks.

Mortgage Meltdown Update

"We believe that declining home prices and other factors ... may produce foreclosures numbers on 2006 originations approaching or exceeding those on loans originated in 2000," Samuels said in remarks.

The company believes that there was overcapacity in the mortgage market in 2004, the company said, and does not agree with federal regulators that borrowers should be approved at the "fully indexed rate" that considers the long-term costs of the loan.