Countrywide Mortgage Loans Slid 48% in October

Countrywide Financial said October mortgage loan volume fell 48 percent from a year earlier, but credit quality has begun to stabilize as the largest U.S. mortgage lender curtails riskier
home loans.

The company also said it ended October with 52,775 employees, down 2,077 from September and 8,092 from August. Countrywide plans to eliminate up to 12,000 jobs by December as
it focuses on making smaller, safer -- and fewer -- loans.

Countrywide's headquarters in Los Angeles.
Mark J. Terrill
Countrywide's headquarters in Los Angeles.

(Blog: Is Countrywide Hiring?)

Countrywide said it lost $1.2 billion in the third quarter, but expects to be profitable this quarter and in 2008, despite a projected 30 percent drop next year in U.S. mortgage volume.

Countrywide shares rose slightly on the New York Stock Exchange. The shares began the year at $42.45.

Calabasas, California-based Countrywide said it funded $22 billion of home loans in October, down from $41.9 billion a year earlier, but up 4 percent from September's $21.2 billion.

Volume of loans considered to be riskier fell significantly. Adjustable-rate lending totaled $3.1 billion, down 81 percent from a year earlier and 19 percent from September.

Subprime loans, which go to people with poor credit, totaled just $42 million in October, down 84 percent from September, and 99 percent from $3.3 billion a year earlier. Home equity loans totaled $1.36 billion in October, down 15 percent from September and 68 percent from a year earlier.

In Countrywide's $1.47 trillion loan servicing portfolio, delinquencies as a percentage of unpaid principal rose to 5.94 percent from September's 5.85 percent and 3.97 percent a year earlier.

The pending foreclosure rate dipped to 1.23 percent from September's 1.27 percent, and rose from 0.58 percent a year earlier.

Chief Operating Officer David Sambol said Countrywide "continues to work diligently toward mitigating the consequences our borrowers are facing as a result of the current market conditions."

Countrywide last month offered to refinance or modify up to $16 billion of adjustable-rate mortgages to help some 82,000 borrowers who face higher payments stay in their homes.

Through Monday, Countrywide's shares had fallen 69 percent this year, hurt by mounting delinquencies and defaults, and losses on loans already made as capital markets tightened.

Despite the third-quarter loss, Chief Executive Angelo Mozilo on Oct. 26 said Countrywide has a "much better chance of success" than other mortgage industry participants.