LAWFUEL – More than 70 mortgage companies have toppled since the beginning of last year, while Countrywide Financial Corp., the biggest U.S. mortgage company, led shares of home lenders lower on concern bankers will cut off cash as foreclosures and overdue payments surge nationwide.
Bloombergs report that Countrywide, based in Calabasas, California, fell $1.26, or 4.7 percent, to $25.35 at 12:32 p.m. in New York Stock Exchange composite trading, bringing the loss this year to 40 percent. Thornburg Mortgage Inc. lost 27 percent and Accredited Home Lenders Holding Co. dropped 5.8 percent.
Waning demand from investors for home loans has toppled more than 70 mortgage companies and half a dozen hedge funds since the start of last year. Concern about rising defaults has prompted bankers to reduce credit lines for home lenders. Countrywide, which accounts for almost a fifth of all mortgages made in the U.S., said delinquencies rose for a fifth straight month.
“The mortgage market is just not working,” analyst Robert Napoli of Piper Jaffray Cos. said in a note to clients. Countrywide “has the liquidity to work its way through the current environment, but it is still not an easy time.”
While Countrywide’s lending totaled $39 billion last month and applications for new mortgages increased 5 percent from July 2006, mortgage funding decreased 14 percent from a month earlier, the company said today in a statement. The drop reflects tighter standards imposed on borrowers, Countrywide said.