Loan Production Plummets at Countrywide

[Dec 9, 2007.]

As yet another indicator that the housing market is in free fall, Countrywide Financial Corporation is reporting that its home loan production nosedived last month. According to figures released by the company, home loans are now about half what they were this time last year. Meanwhile, the percentage of delinquent loans being handled by Countrywide rose sharply as the housing slump grew deeper.

The downturn is significant, given the fact that Countrywide represents the nation's largest lender. The mortgage company produced $21.9 billion in home loans in October. That's down 48% from October of 2006, when the rate was $41.8 billion.

Countrywide originated a total of 117,430 during October of 2007. Last year at this time, the figure was 230,196. Meanwhile, total fundings increased 4% from September.

When the subprime mortgage market dried up, Countrywide sharply curtailed its subprime loan originations. Subprime loans are those home loans that are extended to consumers with troubled credit histories. While subprime loans helped to increase home ownership, especially in minority communities, they have proven to be a financial disaster, resulting in numerous foreclosures. In fact, the foreclosure rate is expected to grow in the coming months, as adjustable-rate mortgages are re-calculated at significantly higher rates. Some homeowners, in fact, may see their monthly mortgage payments rise as much as $300 as a result of the adjustable rate readjustments.

Subprime mortgage fundings at Countrywide plunged nearly 99% over the last year to $42 million. Meanwhile, home equity loans are down 68% from last year at this time.

At the end of October, Countrywide's mortgage loan servicing portfolio amounted to $1.47 trillion, an increase of 16% from October of 2006. Meanwhile, nearly 6% of its loans were delinquent last month, a noticeable rise over October of 2006 totals.

The nation's housing crisis is not expected to turn around until the middle of 2008.

Julie Ann Amos
December 9th 2007

Recent News

• Consumers Need to Guard Their Bank Accounts This Holiday Season
  With the holidays just around the corner, experts say consumers would be wise to re-examine their spending habits. Because of the sales that are ever-present in the days leading up to Christmas, many individuals may be tempted to push their credit spending to the limit. [9th December 2007]


• Country Still Reeling from Subprime Loan Crisis
  The nation appears to be continuing to feel the effects from the collapse of the subprime loan industry. [9th December 2007]


• Housing Crisis Produces Stress
  It's apparent that the current housing crisis in the U.S. is having a decisive impact on banks, home buyers, home sellers, and investors. [9th December 2007]


• Government Works to Reduce Foreclosure Rate
  Members of Congress are calling for a renewed government effort to reduce the rate of home foreclosures in the country. [6th December 2007]


• Fed Cuts Interest Rate to Boost Housing
  When the Federal Reserve Board cut its federal funds rate by a quarter of a percentage point, the goal was to correct the national housing slump. The rate decrease - the second in 6 weeks - is also designed to help keep recession at bay. [6th December 2007]


• Gas Station Customers to Pay the High-Tech Way
  Motorists in Chicago have a new, high-tech method of paying for their gasoline. [6th December 2007]