Industry News

Countrywide’s $1.2 billion quarterly loss first in 25 years

Lender expects return to profitability in Q4

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

Countrywide Financial Corp. today reported $1.2 billion in third-quarter losses -- the first time the company has dipped into the red in 25 years -- but said it will be profitable in the fourth quarter after tightening underwriting guidelines and shedding workers to reflect lower loan volumes. Third-quarter losses were driven by adjustments to the value of loans, an abrupt loss in demand for nonagency loans and securities, and increased credit costs related to continued deterioration in the housing market, said David Sambol, president and chief operating officer. Countrywide blamed disruption in capital markets for a severe lack of liquidity for nonagency loans and mortgage-backed securities, resulting in $1 billion in losses on the sale or write-downs of such loans. The Calabasas, Calif.-based lender moved about $12 billion in nonagency loans -- mortgages not eligible for purchase by Fannie Mae and Freddie Mac -- into the company's held-for-investment portfolio after their write down...