Countrywide Second Quarter Results Deteriorate

July 21, 2008 No Comments »

worse

Bank of America disclosed today that newly-acquired Countrywide Financial experienced a second-quarter loss of $2.33 billion, including about $4 billion in credit-related losses.

That compares to a first-quarter loss of $893 million and a profit of $485 million in the second quarter of 2007.

Countrywide saw total loan production of just $59 billion during the quarter, down from $73 billion in the first quarter, $69 billion in the fourth quarter of 2007, and $130 billion a year earlier.

Purchase money mortgage volume actually increased 22 percent from the first quarter, but refinance volume slumped a whopping 35 percent.

The loan pipeline also slipped to a mere $25.7 billion, down from $45.5 billion at the end of the first quarter and $68.5 billion a year ago.

BofA disclosed that 26.7 percent of Countrywide’s subprime loan portfolio was considered non-performing (usually classified as 3 months behind on mortgage payments) at quarter-end, while 12.7 of prime option arms and 6.3 percent of prime first-liens also held that classification.

However, Countrywide is now expected to boost profits at Bank of America within the year, though the acquisition was originally expected to have a neutral effect on per-share earnings in 2008.

The banking giant also took the time to reaffirm its support for Countrywide’s wholesale and correspondent lending channels, which many assumed would be the first operations to get deep sixed.

And noted that Countrywide has worked out (repayment plans, loan modifications) 119,000 loans through June, nearly twice the number of foreclosures completed.

Bank of America expects to restructure roughly $40 billion in mortgages over the next two years, which it believes will help more than 265,000 families stay put.

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