Mozilo: Revision Isolated Concern

Countrywide Financial Corp.'s revision of the timing of the gain on sale from certain mortgage-backed securitizations appears to be an isolated financial reporting concern, company chairman and chief executive officer Angelo Mozilo said in a Tuesday afternoon conference call."We have not been provided any information from our auditors that there are any other issues," Mr. Mozilo said. Conference call participants expressed some concern that the development might have broader implications based on a report Countrywide said it planned to file with the Securities and Exchange Commission indicating that the development was "a material weakness in internal controls over financial reporting." But Mr. Mozilo said it did not reflect any other concerns at the company. He said only small portions of a few, primarily subprime, transactions (equal to 0.1% to 2.2% of the principal balance of the related loans that were sold after the end of the quarter) were involved in the revision. At the heart of the accounting concerns in these deals were embedded derivatives with little value and their compliance with Statement of Financial Accounting Standards 140 on when they should be reported, he said.