Countrywide Financial Corp. saw a 17% drop in loan production in August as a result of weak demand, liquidity issues, and product cutbacks.
Total lending for the month was $34 billion, and roughly $52 billion in loan applications were processed as of August 31, a 19% drop.
Loan originations were down 12% from July, “a result of the continued slowdown in housing and credit tightening in the mortgage market,” David Sambol, chief operating officer, said in the statement.
Originations were also down 12% from August 2006, and the WSJ reported that the largest U.S. home-mortgage lender is predicting a 25% drop in loan originations in 2008, though analysts see it as high as 40%!
Countrywide continues to be under stress as the secondary market festers, and investors pull out of the beleaguered company.
The lender is set to cut 12,000 employees in the next three months, and I’ve heard reports that its subprime lending unit, Full Spectrum Lending, is shutting down 45 branches this month.
Rumors are also swirling that the Countrywide Specialty Lending Group (SLG) is shutting down operations today.
Earlier this week a report indicated that Countrywide was looking for more cash despite a recent $2 billion investment from Bank of America and a huge infusion from the Fed.
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