NEW YORK — Countrywide Financial Corp., the largest U.S. home-mortgage lender, said the number of past-due home loans it services soared last month and it made 44% fewer mortgages amid the housing downturn and a funding crisis engulfing the entire home-lending industry.
As a percentage of unpaid principal balance, delinquent loans jumped to 5.85% in September from 4.04% a year earlier, and foreclosures increased to 1.27% from 0.51%, the Calabasas, Calif., lender said Thursday. Its loan-servicing portfolio, including mortgages made by other lenders and owned by investors, rose 17% to $1.46 trillion.
Mortgage servicers collect fees for performing such tasks as collecting monthly payments and contacting borrowers who fall behind on their loans. Countrywide "is continuing to take the necessary steps to assist borrowers with foreclosure avoidance and investors with loss mitigation," said Countrywide President and Chief Operating Officer David Sambol.
Many of Countrywide's competitors in recent weeks have warned of the need to beef up their loan-loss reserves in light of surging home-mortgage delinquencies. For instance, Washington Mutual Inc. (WM), the largest U.S. savings and loan, said last week it would set aside $975 million in the third quarter to cover future loan losses, compared with $166 million a year earlier.
Analysts polled by Thomson First Call expect Countrywide to report a loss of 97 cents a share when it releases third-quarter earnings on Oct. 26. The loss estimates primarily stem from their expectations for a drop in Countrywide's lending volume, write-downs in the value of its mortgage assets, and higher loan-loss provisions. Countrywide earned $1.03 a share a year earlier.
Countrywide originated $21 billion of mortgages in September, the company said, and about 89% of that amount came from its banking unit - reflecting its move to rely on its deposit-taking savings bank to provide funding for lending following its curbed access to the debt markets. Total assets at its banking arm grew to $101 billion as of Sept. 30. Just a year ago, only a third of the loans Countrywide made came from the bank. The lender, which has set a goal of reducing its work force by 20%, slashed nearly 5,000 jobs last month, with employees involved in originating mortgages bearing the brunt of the cuts. Total head count was 55,932 in September.
Countrywide also continued to cut its loan pipeline, which should lessen the stress on its near-term funding needs. It had $42 billion of in-process loans as of the end of last month, a drop of 35% from a year earlier and a drop of 19% from the previous month.
Shares of Countrywide traded recently at $18.64, down 16 cents, or 0.9%. The stock is trading at about a 30% discount to its current book value of around $25 a share. But many analysts expect its book value to fall below $20 because of potential asset write-downs and other losses.
