Despite a drastic cutback in pay-option loans, Countrywide Financial Corp. saw a 13 percent increase in loan fundings in January compared to the same month last year, to $37.1 billion, the company announced today.

Countrywide, which funded $6.9 billion in pay-option loans in January 2006, cut back production in that category by 61 percent, to $2.7 billion. Adjustable-rate mortgages funded during the month totaled $13.7 billion, down 19 percent from a year ago. Subprime loan funding was down only slightly to $2.9 billion, compared with $3 billion in January 2006.

The growth in total mortgage loan fundings was driven by a sharp increase in refinancing, with a 30 percent increase in nonpurchase loans to $23.8 billion compared to a year ago.

Total loan fundings in January were down 11 percent from December 2006, but Countrywide’s mortgage loan-servicing portfolio continued to grow, surpassing $1.3 trillion at Jan. 31, 2007, a 17 percent increase from 12 months ago.

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