Countrywide Miss Clocks Lenders

Mortgage lenders took a pasting Tuesday after Countrywide Financial(CFC Quote - Cramer on CFC - Stock Picks) said problems in the mortgage industry have expanded beyond subprime loans.

This spring, the Calabasas, Calif., lender was loudly bullish on the implosion of the subprime debt market, saying it viewed the collapse of dozens of smaller competitors as an opportunity rather than a signal of tough times ahead.

But Countrywide changed its tune Tuesday, saying "delinquencies and defaults continued to rise across all mortgage product categories" -- a sign that problems have crept into higher-quality credits from subprime. The news sent shares of all types of lenders tumbling.

"The Countrywide news is a big part of today's story, but it reinforces the news that we've been getting from lenders -- that credit is weak," says Bose George, an analyst at Keefe Bruyette & Woods.

"That has been a theme not just today, but the last several days," he adds. "Partly the subprime pure-play names are gone. The next level if you want to play the equity is the pure play Alt-A lenders. Those stocks are getting hit pretty hard as a result."

Accredited Home Lenders(LEND Quote - Cramer on LEND - Stock Picks) stock dropped as much as $2.50, or 19%, to $10.42.

Shares of IndyMac(IMB Quote - Cramer on IMB - Stock Picks), Downey Financial(DSL Quote - Cramer on DSL - Stock Picks), Fremont General(FMT Quote - Cramer on FMT - Stock Picks), NovaStar Financial(NFI Quote - Cramer on NFI - Stock Picks) and Impac Mortgage(IMH Quote - Cramer on IMH - Stock Picks) fell anywhere from 3% to 9% on Tuesday.

American Home Mortgage(AHM Quote - Cramer on AHM - Stock Picks), on the other hand, was flat at $11.67.

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