Credit Lines Lift Countrywide

Countrywide Financial(CFC Quote) surged 8% after the nation's largest home lender arranged for $12 billion in additional secured borrowing through new or existing credit facilities.

The Calabasas, Calif.-based lender made the announcement as it unveiled a number of less upbeat developments. The company said loan fundings dropped 17% from a year ago in August, to $34 billion, amid a slowdown in housing and credit tightening in the mortgage market.

Countrywide's average daily mortgage loan applications also fell 12% from a year earlier to $2.3 billion. At the end of August, Countrywide's loans in the pipeline totaled $52 billion -- down 19% from $64 billion a year earlier, the company said.

Countrywide has been hit hard by rising loan defaults and delinquencies that have essentially shut down the secondary market for mortgage-backed securities. It and rivals like Thornburg (TMA Quote) have had to scramble to raise cash to keep funding loans.

"Looking forward, the company expects that it will be a long-term beneficiary of the current conditions and corrections in the mortgage industry, and we are confident that the actions which we have taken in response to the current environment will position us for profitable future growth and success," David Sambol, Countrywide's president and COO said.

Last month, Bank of America(BAC Quote) invested $2 billion in the company. The Charlotte bank bought Countrywide's nonvoting convertible preferred stock that can be converted into common stock at $18 per share. The preferred shares yield 7.25%.