Morgan: Countrywide Could Take $4B Hit in 3Q

Countrywide Financial Corp. could take a $4 billion hit on its loan inventory in the third quarter, according to a new research report issued by Morgan Stanley & Co.Morgan analyst Ken Posner is predicting that the Calabasas, Calif.-based mortgage banker could post a net loss as large as $2.4 billion in the third quarter. Countrywide's capital markets group held $56 billion in assets at the end of the second quarter. Morgan says up to 60% of those assets might be considered "risky" and that mark-to-market writedowns could range from just under $1 billion to $4 billion. Mr. Posner has an "equal-weight" rating on the stock and says he believes it has "enough cash and cash flow to operate and repay financial obligations through 2008." Countrywide can be found online at http://www.countrywide.com.