Countrywide Loses $1.2B in 3Q, but Sees 4Q Profit

Countrywide Financial Corp. on Friday morning posted a stunning $1.2 billion loss in the third quarter -- the largest loss in its history -- but predicted a return to profitability in the fourth quarter and next year.The company also revealed that it moved $12 billion of nonagency loans and securities onto the balance sheet of its bank, into a "held-for-investment" account. In a statement, Countrywide chairman and chief executive Angelo Mozilo blamed the loss on the mortgage market's nonprime liquidity crisis, noting that it was forced to revalue its mortgage holdings downward and pay more to third parties for credit protection. The Calabasas, Calif.-based company said it lost $1 billion by selling mortgage assets at a discount or marking down their value. Its servicing business was a major source of income in the quarter, posting operating earnings of $764 million, a 47% rise from that of a year earlier. But its loan production unit lost $1.3 billion in the third quarter. Countrywide funded $94.6 billion in loans during the quarter, a 19% drop from the level of a year earlier. The company can be found online at http://www.countrywide.com.