Countrywide Financial's Delinquencies Rise

Countrywide Financial Corp., the biggest U.S. mortgage lender, reported that payments are late on nearly 20% of its subprime mortgage loans. Countrywide's shares dropped 2.4% to $37.44 on the news. The company submitted a filing to the SEC yesterday that said payments were late on 19% of subprime loans versus 15.2% at the end of 2005 and 11.3% at the end of 2004. Housing prices have stagnated during the sector slowdown and interest rates have gone up, pinching subprime borrowers who are unable to pay their mortgages. More than 20 subprime lenders have closed down or sought buyers over the past year. Payments are late on 2.9% of Countrywide's prime home-equity loans, up from 1.6% a year ago and 0.8% at the end of 2004. In related news, research firm First American LoanPerformance reported that payments were at least 60 days late in December on approximately 14% of subprime loans packaged into mortgage securities, up from 8.3% a year ago.

Sources: Wall Street Journal, Bloomberg, Business Week
Commentary: Regulators Might Release New Subprime Lending Guidelines Today • Subprime Finance Turbulence is Spreading • Only the Strongest Sub-Prime Lenders Will Survive
Stocks to watch: Countrywide Financial Corp. (CFC). Competitors: Bank of America Corp. (BAC), Washington Mutual Inc. (WM), Wells Fargo & Co. (WFC)

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