Countrywide shares hit 11-year low

Foreclosures, late payments on rise

CHARLOTTE - Countrywide Financial Corp. fell in New York trading to the lowest since 1996 as foreclosures by and late payments to the biggest US mortgage lender rose to the most in five years.

Foreclosures doubled to 1.44 percent of unpaid principal in December from 0.7 percent a year earlier at the unit that handles billing and processing, Countrywide said yesterday. Overdue loans rose to 7.2 percent from 4.6 percent.

Countrywide shares dropped 37 cents, or 6.8 percent, to $5.10 yesterday after losing more than a quarter of their market value Tuesday, when the company denied speculations it will file for bankruptcy. The stock lost 79 percent last year in what chief executive Angelo Mozilo has called the worst housing market since the Great Depression.

"There is no liquidity returning to the market and everyone is just frantic," said consultant David Olson of Wholesale Access Mortgage Research in Columbia, Md., a former market research director at Freddie Mac. Some of Countrywide's mortgages that offered the most flexible terms "are performing horribly, which is why they can't survive."

Countrywide's decline in New York Stock Exchange composite trading led shares of other mortgage companies lower. IndyMac Bancorp Inc., the second-biggest independent mortgage company, lost 17 percent, and Washington Mutual Inc., the biggest US savings and loan, fell 3.1 percent.

Investors controlling 134.4 million Countrywide shares were betting on a decline as of Dec. 31, according to data compiled by Bloomberg. The so-called short interest is about 4.7 times the company's average daily trading and about 23 percent of the shares available to the public.

Credit-default swaps on Countrywide moved deeper into distressed levels for a second day. Sellers were demanding 30 percent upfront and 5 percent a year for contracts protecting Countrywide bondholders from default for five years, according to broker Phoenix Partners Group in New York. That compares with 28 percent upfront and 5 percent a year at the close of trading Tuesday. A rising price indicates more skepticism about a company's ability to pay its debts.

Countrywide traded as high as $45.26 last January, a record, and its market value hit about $27 billion, 10 times more than yesterday's level. Its workforce peaked at 61,586 in July before declining 18 percent to 50,600 at the end of 2007.

Speculation about bankruptcy surfaced last year after investors balked at buying Countrywide's short-term debt and concern about rising defaults brought markets where the company sold its mortgages to a standstill. The lender tapped emergency credit lines and got a bailout from Bank of America.