Countrywide loses $1.2 billion

LOS ANGELES — Countrywide Financial Corp. lost $1.2 billion in the third quarter, but its shares soared Friday after the nation’s largest mortgage lender said it expects to be profitable this quarter and next year.

It was Countrywide’s first quarterly loss in 25 years.

But the Calabasas, Calif.-based company said it will be profitable in the fourth quarter and in 2008, as it restructures its business to take advantage of the current market.

“We continue to be bullish about the long-term prospects of both Countrywide and our industry,” Chairman and Chief Executive Angelo Mozilo said during a conference call with Wall Street analysts.

Shares jumped $4.23, or 32.4 percent, to close at $17.30 on Friday after rising as high as $17.51. The stock is down 64 percent from its 52-week high of $45.26.

The loss for the third-quarter came as mortgage market woes forced Countrywide to set aside millions in loan-loss provisions and writedowns, and the lender originated fewer loans.

Countrywide’s loss amounted to $2.85 per share for the July-September period in contrast to a profit of $647.6 million, or $1.03 per share, a year ago.

Analysts polled by Thomson Financial, on average, forecast a loss of $1.28 per share for the quarter.

Countrywide reported a revenue figure of negative $50 million in the third quarter because of the impact of impairments and charges, versus $2.82 billion during the same period a year ago.

Mozilo attributed the quarterly loss to “unprecedented disruptions” in the mortgage market and the ongoing national housing slump.

Chris Brendler, an analyst with Stifel Nicolaus &Co. Inc., said he is not convinced the company will turn a profit next quarter.

“They seem to have taken some big write-downs, taken a lot of pain this quarter, the pain going forward should be smaller,” Brendler said. “I still remain concerned about the potential for another credit write-down and just how profitable this business will be, even after they get past the credit headaches in the near term.”

Mozilo also said he was cooperating with informal inquiry by the Securities and Exchange Commission into his sales of his Countrywide stock.

“At no time did I make any trading decisions based on any material nonpublic information, and I fully complied with all company policies,” Mozilo said during the call. “I am confident that this will demonstrate that I’ve complied with all protocols.”

In its earnings report, the company said origination volume fell to $96 billion, from $118 billion as Countrywide shifted its product mix to more traditional loans.

Countrywide ramped up its loan-loss reserves to fight rising delinquencies and defaults, especially among subprime mortgages given to customers with poor credit history. Countrywide reserved $934 million for bad loans in the third quarter, up from $38 million held during the same quarter last year.

Some 4.41 percent of Countrywide’s conventional first mortgage loans were delinquent as of Sept. 30, up from 2.57 percent in the year-ago quarter. For prime home-equity loans, delinquencies inched up to 13.5 percent from 13.4 percent.

The number of subprime loans that were behind in payments soared to 29.08 percent from 18.32 percent in the year-ago period.

In the subprime loan category, 12.63 percent of the loans were behind in payments by 90 days or more, more than twice the year-ago rate.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Customers walk in and out of Fred Meyer along Evergreen Way on Monday, Oct. 31, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Everett council rebukes Kroger for plans to close Fred Meyer store

In the resolution approved by 6-1 vote, the Everett City Council referred to store closure as “corporate neglect.”

Logo for news use featuring Snohomish County, Washington. 220118
AG sues owner of bikini barista stands in Snohomish County

Lawsuit alleges Jonathan Tagle subjected workers to sexual harassment, retaliation and wage theft.

Inside the passenger terminal at Paine Field Airport on Wednesday, Sept. 3, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Post names Paine Field as one of the best U.S. airports

Reporters analyzed 2024 data from 450 airports, including wait times to get through TSA security and ease of getting to the airport.

A semi truck and a unicycler move along two sections of Marine View Drive and Port Gardner Landing that will be closed due to bulkhead construction on Wednesday, Sept. 3, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Port of Everett set to begin final phase of bulkhead work, wharf rebuild

The $6.75 million project will reduce southbound lanes on West Marine View Drive and is expected to last until May 2026.

Customers walk in and out of Fred Meyer along Evergreen Way on Monday, Oct. 31, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Kroger said theft a reason for Everett Fred Meyer closure. Numbers say differently.

Statistics from Everett Police Department show shoplifting cut in half from 2023 to 2024.

Funko headquarters in downtown Everett. (Sue Misao / Herald file)
FUNKO taps Netflix executive to lead company

FUNKO’s new CEO comes from Netflix

Inside El Sid, where the cocktail bar will also serve as a coffee house during the day on Tuesday, Aug. 12, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
New upscale bar El Sid opens in APEX complex

Upscale bar is latest venue to open in APEX Everett.

A Boeing 737 Max 10 prepares to take off in Seattle on June 18, 2021. MUST CREDIT: Bloomberg photo by Chona Kasinger.
When Boeing expects to start production of 737 MAX 10 plane in Everett

Boeing CEO says latest timeline depends on expected FAA certification of the plane in 2026.

Kongsberg Director of Government Relations Jake Tobin talks to Rep. Rick Larsen about the HUGIN Edge on Thursday, July 31, 2025 in Lynnwood, Washington. (Olivia Vanni / The Herald)
Norwegian underwater vehicle company expands to Lynnwood

Kongsberg Discovery will start manufacturing autonomous underwater vehicles in 2026 out of its U.S. headquarters in Lynnwood.

Logo for news use featuring the municipality of Snohomish in Snohomish County, Washington. 220118
Garbage strike over for now in Lynnwood, Edmonds and Snohomish

Union leaders say strike could return if “fair” negotiations do not happen.

Richard Wong, center, the 777-X wing engineering senior manager, cheers as the first hole is drilled in the 777-8 Freighter wing spar on Monday, July 21, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Boeing starts production of first 777X Freighter

The drilling of a hole in Everett starts a new chapter at Boeing.

Former barista claims Starbucks violated Everett law

The part-time worker wanted more hours, but other workers were hired instead, the lawsuit alleges.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.