Countrywide's failed mortgages may hit high
No. 1 home loan lender's exec says number may exceed the worst foreclosure rate of 9.89% in 2000.
March 22 2007: 12:03 PM EDT
WASHINGTON (Reuters) -- Countrywide's subprime mortgage defaults for 2006 loans may exceed the company's highest on record, a company executive told a government panel examining mortgage lending.
Countrywide's (down $0.96 to $35.99, Charts) "worst single origination year was 2000, for which the cumulative foreclosure rate was 9.89 percent," Sandor Samuels, the company's executive managing director, said in prepared remarks.
"We believe that declining home prices and other factors ... may produce foreclosures numbers on 2006 originations approaching or exceeding those on loans originated in 2000," Samuels said in remarks.
The company believes that there was overcapacity in the mortgage market in 2004, the company said, and does not agree with federal regulators that borrowers should be approved at the "fully indexed rate" that considers the long-term costs of the loan.
The health of Countrywide loan quality is receiving renewed scrutiny in light of subprime lender New Century Financial's (down $0.17 to $1.50, Charts) announcement earlier in March that it could not meet repayment obligations based on increased foreclosures and late payments by its customers.
The fate of mortgage lenders can affect the fortunes of creditors, such as major banks Citigroup (down $0.07 to $51.96, Charts), Bank of America (down $0.15 to $51.71, Charts), and Merrill Lynch (down $0.70 to $84.70, Charts).
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