Countrywide Mortgage Lending Portfolio: Foreclosures Galore

Countrywide Financial Corp., the largest U.S. mortgage lender, said on Thursday the share of its mortgage portfolio that faces foreclosure nearly doubled in March from a year earlier in a difficult national/Florida housing market.
Its overall mortgage lending, however, rose 5 percent in the month from March 2006 and 25 percent from February, suggesting that the Calabasas, California-based lender is adding market share as weaker rivals pull back and industrywide volume contracts.

“Given its substantial pipeline, Countrywide’s origination volumes should hold up significantly better than the overall market, despite the extremely challenging conditions in the subprime mortgage segment,” wrote Credit Suisse analyst Moshe Orenbuch.

Countrywide, which services $1.35 trillion of Florida home loans and loans around the nation, said that pending foreclosures as a percentage of unpaid principal balances rose to 0.83 percent in March from 0.44 percent a year earlier and 0.80 percent in February.

Its foreclosures based on the number of loans serviced rose to 0.69 percent from 0.47 percent the prior March but fell from February’s 0.70 percent. The delinquency rate was 4.29 percent, versus 3.68 percent last March and February’s 4.71 percent.

Industrywide, foreclosures are rising and mortgage originations are declining as house price appreciation slows and lenders tighten their underwriting standards. More than 30 subprime lenders, which make home loans to people with poor credit histories, have sold their businesses, quit the industry or gone bankrupt in the past year.

COUNTRYWIDE LENDING HIGHER
Against that trend, Countrywide’s loans in process increased by more than 8 percent in March compared with February and March 2006. The company has added 1,268 jobs this year, giving it 55,923, the most since July.

For the first quarter, its nationwide and Florida mortgage lending increased 9 percent to $115 billion.

Countrywide said it funded $43.28 billion of mortgage loans in March, despite declines of 29 percent in both adjustable-rate and in “non-prime” lending, including subprime loans. Chief Operating Officer David Sambol said Countrywide’s home loan business is experiencing “short-term volatility” but should benefit longer-term “as the marketplace rationalizes.”

Last month, the Mortgage Bankers Association said the industry-wide foreclosure rate was 0.54 percent in the fourth quarter, the highest in its 37 years of surveys.

It also projected a 9 percent drop in U.S. mortgage originations this year to $2.28 trillion from $2.51 trillion.