Countrywide Takes A Final Beating

Speculation has increased that Countrywide may indeed seek bankruptcy protection as it announced its number of foreclosures had doubled. The more borrowers that refuse to pay off mortgage loans, the more likely it is that Countrywide will fail. Reuters is reporting:

Its shares fell as much as 20.2 percent as concern persisted that Countrywide might seek bankruptcy protection. The shares fell 27.4 percent on Tuesday though Countrywide rejected an identical rumor.

“Rumors of bankruptcy are still surrounding Countrywide,” said William Lefkowitz, options strategist at brokerage firm vFinance Investments. “Investors still believe that they need an infusion of capital.”

In its monthly operating report, Countrywide said the foreclosure rate among the 9.03 million mortgages for which it collects and processes payments doubled to 1.44 percent from 0.70 percent a year earlier, and rose from November’s 1.28 percent. The delinquency rate rose to 7.20 percent of unpaid balances from 4.60 percent a year earlier.

With shares taking such a beating, bankruptcy threats loom. Many investors are jumping from holding Countrywide, before the shares get any lower. Whether the lender succeeds in getting out of debt will be interesting to see.

January 9, 2008 | Filed Under Get Out of Debt 

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