Countrywide Selloff Accelerates

The Countrywide (CFC Quote - Cramer on CFC - Stock Picks) selloff steepened after CEO Angelo Mozilo said he doesn't expect the U.S. housing market to rebound this year or next.

Shares dropped 12% in midafternoon trading after Mozilo admitted that the nation's biggest mortgage lender was blindsided by a sharp rise in defaults in delinquencies among recent homebuyers.

Countrywide set off a broad decline in shares of banks and lenders Tuesday morning when the company cut its full-year earnings guidance, citing weakening returns in so-called prime mortgages as well as in the subprime loans that swooned this spring. Shares in big rivals such as Downey (DSL Quote - Cramer on DSL - Stock Picks) and WaMu (WM Quote - Cramer on WM - Stock Picks) tumbled 4% each.

"The deterioration in real-estate values, that is the base cause," Mozilo told investors on a conference call Tuesday afternoon. "Clearly the deterioration is a result of the affordability issue and the oversupply. Once that turns around -- the psychology of the country changes."

But Mozilo said it will be 2009 before the housing market starts to recover.

"As I try to walk through what happened there and could a lot of this have been foreseen ... nobody saw this coming," Mozilo said.

Shares were off $3.93 to $30.12 after earlier touching a new 52-week low of $29.99.