Countrywide Aims For $2.5 Trillion

Meanwhile, not every company is worried about matching its hedge gains and MSR losses on a quarterly basis. At least Countrywide Financial Corporation, the nation's largest mortgage servicer, seems to be taking the view that growing market share is more important than shielding itself from every ounce of volatility inherent in the MSR asset.

In a recent investors conference, Countrywide listed among its "goals for 2010" a mortgage servicing portfolio exceeding $2.5 trillion. In April, the company's owned MSR portfolio exceeded $900 billion for the first time.

That would mean Countrywide would have a market share exceeding 20%. Countrywide also hopes to have a mortgage origination market share approaching 30%, or $1 trillion per year in origination volume, by that time.

And don't forget about Countrywide Bank. The company believes that its fast growing bank will have assets approaching $250 billion by 2010.

But Countrywide is not na´ve about the risks inherent in its big goals. The company said that with a $2.5 trillion servicing portfolio, volatility in interest rates may mean that MSR net recovery, or impairment, may not be offset in the same period by its macro-hedge strategy. Countrywide relies heavily on loan origination income to offset servicing losses when interest rates fall.

The company also said that the level of interest rates, price competition and other factors could affect its abilities to achieve its 2010 goals.

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