May 2, 2007

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  NEWS: Countrywide Loses in 1st Quarter

  Countrywide Financial Corp., the nation's hugest independent mortgage lender, announced last week that it had lost about 37% of its first-quarter profits, after accounting for funds lost to bad-debt write - offs. Countrywide stated first-quarter net income of $434 million, or 72 cents per share. Taken at face value, that's quite a bit of a downturn from last year's first-quarter profits of $683.5 million, or $1.10 per share. This time around, revenue shrank 15 percent to $2.41 billion from $2.84 billion. Countrywide's performance fell short of the 77 cents per share on $2.58 billion forecast predicted by the analysts of Thomson Financial.
  
  Countrywide's news is not surprising, given the soaring default rates in the wake of the subprime mortgage bust that began at the end of last year. CEO Angelo R. Mozilo confirmed that connection, citing the blanket deterioration of credit by its higher-risk customers. Bad credit managed to cost Countrywide a whopping $132 million, or 14 cents per share, this past quarter.With defaults booming, and home prices sagging, it makes sense that the lending industry is feeling a direct hit. And the experts say that there isn't really an end in sight.
  
  Despite that, Countrywide reps say that the company is looking optimistically towards their second-quarter prospects. While it is true that the subprime market is collapsing, it is also taking many smaller lenders down with it, say reps. That paves the way for the heavy hitters – Countrywide being the weightiest – to step in and work wonders.
  
  
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