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Countrywide Clock Continues to Tick

Written By Brian Hicks

Posted January 9, 2008




While Countrywide Financial (NYSE:CFC) may have managed to stay out of the fire yesterday, the truth for the nation’s biggest lender is still this: it is mired in the grease of a very hot frying pan.

Foreclosures and late payments, according to a company report released today, are at the highest rate now in five years.

Those ominous numbers, of course, only put a damper on the news that its origination business actually beat expectations, rising 1% in December over its November sales figures.

And in fact, even those numbers were a bit dark. On a year over year comparison, originations actually plummeted by 45%

Much of the decline came from its now non-existent sub prime business.

The company’s sub prime sales plummeted from $3.7 billion in December of 2006 to only $6 million last month. That’s a decline of 99.8%.

Nonetheless, the company continues to put on the brave face, insisting that the dike won’t break.

Angelo Mozilo’s company still says his "finely tuned athlete" will be profitable in 2008.

The markets meanwhile have their own opinion, and its not favorable

Shares of the company fell again today by another 10% in intraday trade on very heavy volume—2 times its normal average by only noon.

Here’s the story that’s driving the volume.

It’s from Bloomberg by David Mildenberg entitled: Countrywide Says Foreclosures, Overdue Loans Rise

"Countrywide Financial Corp., the biggest U.S. mortgage lender, fell in New York trading to the lowest since 1996 as foreclosures and late payments last month were the highest in more than five years.

Foreclosures doubled to 1.44 percent of unpaid principal in December from 0.7 percent a year earlier at the company’s unit that handles billing and processing, Countrywide said in a statement today. Late payments advanced to 7.2 percent of unpaid balances from 4.6 percent.

Countrywide fell 7.7 percent today after losing more than a quarter of its market value yesterday, when the company denied speculation it will file for bankruptcy. Declining home sales and rising defaults pushed Countrywide down 79 percent last year, and Chief Executive Officer Angelo Mozilo has called the housing market the worst since the Great Depression.

“It appears that the housing trends in 2008 will look a lot like 2007, so Countrywide will remain under a lot of stress,” said Tom Atteberry, a money manager in Los Angeles at First Pacific Advisors LLC, in an interview yesterday. “What they are left with is a pretty low-margin business.”

It looks like the clock on this one is beginning to tick down to zero.

Next up, of course, may just be another run on the bank that will dwarf the one in August.

CFC ended the year with $61 billion on deposit.

Keeping them on the books, however, may be another story entirely