Industry NewsMortgage

Fitch cuts Countrywide’s debt rating to near junk

Performance of home-equity, pay-option ARM loans cited

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Add Countrywide Financial Corp. to the list of banks and mortgage lenders who have seen their debt ratings lowered by Fitch Ratings over new concerns about the poor performance of home-equity loans. Fitch announced Wednesday that it was cutting Countrywide Financial's long-term issuer default rating two notches, to "BBB-" -- the lowest investment-grade category. Fitch took the same action for the company's subsidiaries, Countrywide Bank and Countrywide Home Loans Inc. The rationale for the moves -- "deterioration within home-equity portfolios and continued pressure on home prices" -- was the same given March 7, when Fitch cut the debt ratings of some big name banks, including Washington Mutual, Wells Fargo and National City (see Inman News story). Fitch analysts said they believe that Bank of America's decision to purchase Countrywide -- a $4 billion deal announced in January -- remains on track. If the deal goes through, Countrywide would see its i...