Mortgage loans funded by Countrywide Financial Corp. fell below the $40 billion-a-month mark in July for the first time since February, the company said Tuesday, while foreclosures as a percentage of principal balance surged through the 1 percent threshold.

The $39 billion in mortgage loans funded in July by the Calabasas, Calif.-based lender represented a 6 percent increase over the same month last year, but a 13.7 percent decline from the $45.3 billion loans funded in June.

The decline reflected a shrinking mortgage market and Countrywide’s tighter lending guidelines, which have “significantly curtailed total production,” said David Sambol, president and chief operating officer, in a statement.

Purchase loan fundings fell 9.8 percent from June to $18.7 billion, while home equity and refinance loans were down 17 percent from the previous month, to $20.3 billion.

Average daily mortgage loan application activity for July was $2.7 billion, down 15.3 percent from June, and is at its lowest average since October 2006. The mortgage loan pipeline was $62.3 billion at the end of July, down 9.1 percent from June but even with the same period last year.

Subprime loans totaled $1.8 billion in July, or 4.6 percent of mortgages funded for the month, compared with 9.1 percent of total fundings a year ago. Adjustable-rate mortgages of $11 billion represented 28.1 percent of loans funded in July, down from 49.1 percent a year ago.

Delinquencies as a percentage of unpaid principal balance stood at 4.89 percent in July, up from 3.61 percent a year ago. Foreclosures pending as a percentage of principal balance hit 1.04 percent, up from 0.96 percent in June and 0.7 percent at the end of 2006.

Rising delinquencies and foreclosures have made it harder for many lenders to sell their loans to Wall Street investors in the secondary market. In its most recent quarterly report, Countrywide warned that “unprecedented disruptions” in the secondary market could force it to hold more of the loans it originates on its books, restricting the number of loans the company can make.

On Aug. 2, Countrywide issued a statement reassuring investors that it had $50 billion of “highly reliable” short-term funding available as a cushion.

Countrywide continued to add employees during July as part of a strategy to take market share from other lenders during the housing downturn. The lender made 787 hires in loan originations, servicing and closing in July. Total employment in originations rose to 34,326 workers in July, up from 32,253 at the same time last year. The company’s total workforce headcount has increased by nearly 10 percent in the last 12 months, to 61,586.

On Aug. 7, Countrywide announced it was taking over five HomeBanc Corp. branches in Georgia, Florida and North Carolina.

The lender’s mortgage loan servicing portfolio reached $1.43 trillion at the end of July, an 18 percent increase from a year ago.

Source:

http://inman.com/inmannews.aspx?ID=64215