Countrywide Adds to Servicing Portfolio

Prior to announcing a planned acquisition by Bank of America, Countrywide's stock was in the tank, its origination volume is falling and Wall Street is worried about its ability to weather credit losses, but Countrywide Financial Corp. here continues to grow its mortgage servicing portfolio.

Countrywide reported in January that its servicing portfolio had grown to $1.48 trillion, putting it on track to possibly become the first lender to crack the $1.5 trillion mark. (Wells Fargo's servicing portfolio totaled $1.43 trillion as of Sept. 30.)

Countrywide has grown its servicing portfolio by $178 billion, or 15%, from the end of 2006 through the end of 2007, the company said. Countrywide now services more than 9 million home loans.

But credit issues continue to raise questions about Countrywide's potential to profit from the huge portfolio. Countrywide said the delinquency rate on its servicing portfolio was 7.2% of unpaid principal at the end of December, up rom 6.52% in November. A year earlier, the delinquency rate had stood at 4.6%. The foreclosure rate also increased sharply (see related story, page one).

The origination picture is more sobering. Countrywide's home loan funding volume in December was $24 billion, up 1% from November. The November funding volume was up 5% from the October level. The company's origination mix has shifted toward retail originations instead of third-party originations and a greater percentage of government-backed loans, which accounted for 10% of Countrywide's volume in November.

Despite the increases in recent months, loan volume continues to be sharply lower than it was a year earlier.

David Sambol, Countrywide's president and chief operating officer, said that prepayment speeds on Countrywide's servicing portfolio have continued to decline, which increases the value of the mortgage servicing rights assets.

In a previous release, Mr. Sambol said Countrywide backs the Hope Now initiative to help mortgage servicers aid borrowers who are facing imminent increases in their monthly mortgage bill because of rate resets.

"As a founding member and strong advocate of the Hope Now Alliance, we commend all those involved for seeking ways to work together on a solution to assist borrowers facing challenges in today's marketplace. This initiative aligns with Countrywide's own $16 billion home preservation plan announced in October," Mr. Sambol said in a news release that accompanied Countrywide's November results. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/

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