Countrywide Option ARM Fundings Drop 48%

Countrywide Financial Corp., Calabasas, Calif., originated $5.4 billion in payment-option ARMs in August, a 48% decline from the level recorded a year ago.Overall, the nation's largest mortgage banker originated $40 billion in product during the month, a 24% decline from that of August 2005. However, its overall fundings rose 11% compared with those of July of this year. Payment-option adjustable-rate mortgages have come under the scrutiny of federal banking regulators and some legislators. Next week the Senate Banking subcommittee on housing will hold a hearing on "exotic" mortgages, which include option ARMs and interest-only loans. This past summer, Countrywide chief executive Angelo Mozilo said publicly he is concerned about resets on option ARMs.