Citing RE Market, Downey Reveals 3Q Hits

Downey Financial Corp., Newport Beach, Calif., citing a "continued weakening in the housing market," says it will take a charge of $82 million in the third quarter to cover credit losses on its mortgage business.It is forecasting an "operating loss" of $23 million for the quarter when it reports earnings on Oct. 17. According to the Quarterly Data Report, Downey ranked 43rd among all residential lenders in the second quarter. The thrift is just the latest in a long line of publicly traded lenders pre-announcing bad earnings news for the third quarter. "The continued weakening and uncertainty relative to the housing market, coupled with the third-quarter disruption in the secondary mortgage markets, unfavorably impacted our borrowers and the value of their loan collateral," said company chief executive Daniel D. Rosenthal. "This has been particularly true in certain geographic areas such as the greater Sacramento and Stockton areas of Northern California and San Diego County."