|
Countrywide's Portfolio Grows Despite B&C Woes
By Ted Cornwell
Countrywide may be getting some negative press about its 19% delinquency rate on B&C loans, but the company's servicing portfolio -- primarily consisting of prime quality product -- continues to grow.
Countrywide serviced $1.33 trillion of loans at the end of February, according to the company's monthly operational report. That was up 17%, or $195 billion, from February 2006. Not that many years ago, industry prognosticators wondered if there were any additional economies of scale to be gleaned beyond the $100 billion portfolio threshold. Today, the industry's top two servicers each have portfolios exceeding $1 trillion.
David Sambol, Countrywide's president and COO, acknowledged in the company's monthly report that the nonprime lending industry "is currently experiencing significant volatility and instability."
"Aggressive industry underwriting guidelines and lower home price appreciation have resulted in increasing delinquencies and defaults. Furthermore, as a result of investor concerns about nonprime loan performance, yield requirements have increased and secondary market liquidity has been reduced. These factors will adversely impact residual valuations and gains on sale of nonprime loans until market conditions improve," Mr. Sambol said.
He said Countrywide has taken steps to reduce its exposure to losses. Recently, the company stopped funding 100% loan-to-value ratio loans, according to widely published reports. And Mr. Sambol said that nonprime fundings accounted for only 7% of the company's loan production in February.
The company owned $402 million of nonprime residual interests at the end of last year, accounting for just 0.2% of Countrywide's assets, he added.
Mr. Sambol said the current woes in subprime lending should lead to more "rational" pricing of risk. He said Countrywide is also "well positioned to take advantage of this market disruption" as a slew of firms exit the business.
Click here for an archive of stories from the MSN newsletter.
| 
