Mortgage Fundings for Countrywide Decrease in September

[Nov 5, 2007.]

 

A major mortgage lender reports that its mortgage fundings dropped a significant amount in September.

Countrywide Financial Corporation is the country's largest mortgage lender. The company has just announced that its mortgage fundings plunged 44% in September compared with the same period one year ago. The fundings totaled $38.1 in September of 2006 and have now dropped to $21.2 billion.

The precipitous drop comes amidst the company's decision to transition from subprime loans to more traditional offerings. Subprime loans are risky products that are offered to individuals with shaky credit histories. In the past, Countrywide allocated most of its loans as securities and sold them in the secondary market.

However, the demand for the securities has nosedived in recent months because of the steep rise in delinquencies and defaults. In fact, the volume of mortgage originations has dropped tremendously as a result of the bottoming out of the secondary market and the overall housing crisis.

Unfortunately, the number of foreclosures doubled in September, according to figures released by the firm known as RealtyTrac. The number of foreclosures was a little more than 112,000 in the fall of 2006, but rose to more than 220,000 this September.

Meanwhile, Countrywide is cutting its work force. The company reduced its staff by nearly 5,000 last month. All told, one in five Countrywide jobs is expected to be eliminated. Unsurprisingly, shares of Countrywide have decreased significantly since the beginning of the year.

Production is also lagging at Countrywide. There are a little more than $40 billion worth of loans in its pipeline this year. In 2006, it had some $65 billion worth of loans in the works.

Countrywide is just one of the casualties of the national housing crisis. Real estate experts predict that the crisis will continue well into next year. In fact, the crunch is not expected to be alleviated until the middle of 2008.

Julie Ann Amos
November 5th 2007

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