Countrywide: 1 in 3 Subprime Mortgages Delinquent

Countrywide Financial, the largest U.S. mortgage lender, Tuesday said more than one in three subprime mortgages were delinquent at year-end in the $1.48 billion portfolio of home loans it services.

Countrywide Financial
Kevork Djansezian
Countrywide Financial

The comments on loan delinqencies comes as the troubled mortgage lender reported a loss of $422 million, or 79 cents a share, for the fourth quarter, compared with a year-earlier profit of $622 million, or $1.01 per share.

Countrywide said borrowers were delinquent on 33.64 percent of subprime loans it serviced as of Dec. 31, up from 29.08 percent in September. It also said borrowers were at least 90 days late on payments on 17.25 percent of subprime mortgages.

The rate of late payments rose to 7.32 percent at year end from 5.76 percent on prime home equity loans, and to 5.76 percent from 4.41 percent on conventional first mortgages, Countrywide said. For all loans, the delinquency rate rose to 8.64 percent from 7.12 percent, it said.

Countrywide, the largest U.S. mortgage lender, on Oct. 26 projected a fourth-quarter profit of 25 cents to 75 cents per share. It had not updated that forecast even as the housing market deteriorated. The company's $1.2 billion third-quarter loss had been its first quarterly loss in 25 years.

Analysts on average expected a loss of 32 cents per share for the fourth quarter, according to Reuters Estimates.

"While considerably improved from the previous quarter, (results) were adversely impacted by further credit deterioration across the industry and continued illiquidity in the secondary mortgage markets," Chief Executive Angelo Mozilo said in a statement.

Bank of America, the second-largest U.S. bank, on Jan. 11 agreed to buy Countrywide in a transaction that on Monday valued the mortgage lender at about $4.3 billion.

The transaction valued Countrywide at $7.16 per share, but shares of Countrywide have since declined on speculation that Bank of America might seek to renegotiate the purchase. The bank has repeatedly denied that prospect. Chief Executive Kenneth Lewis on Jan. 15 said the bank conducted "the mother of all due diligences" before agreeing to buy Countrywide.

Countrywide shares closed Monday at $5.95. They have fallen 86 percent in the last year.

Countrywide said it is not holding a conference call to discuss results, citing the Bank of America merger. Lewis is scheduled to speak later Tuesday at a Citigroup financial services conference.