Countrywide Loss Is Worse Than Expected

The mortgage lender's loss almost doubled the worst of analysts' expectations, as the lender boosted its reserve for credit losses by $1 billion.
By Lauren LaCapra ,

Countrywide Financial

(CFC)

reported a first-quarter loss far beyond Wall Street's worst expectations on Tuesday, as the mortgage lender boosted its reserves to cover bad loans due to a severe downturn in the U.S. housing market.

The Calabasas, Calif.-based company lost $893.1 million, or $1.60 per share, compared with a profit of $434 million, or 72 cents per share, a year earlier. Analysts' predictions varied from a loss of 88 cents per share to a profit of 80 cents per share, according to Thomson Financial. The average estimate was a profit of 2 cents per share.

Countrywide shares dropped 17 cents, or 2.9%, to $5.66 in recent trading. Its shares have plummeted about 85% over the past year as the troubled lender dealt with the housing-market fallout.

Countrywide was forced to write down assets last quarter and increase reserves to cover future losses as home values declined and homeowners continued to default or become delinquent on mortgage payments. The company posted $3.05 billion worth of credit-related charges across all its divisions and added $1 billion to its reserve for such losses, which now totals $3.4 billion.

The results were a continuation of Countrywide's weak performance during the last half of 2007, when it lost $1.62 billion as the housing downturn started to take shape. Facing a plunging share price and an outlook for further housing-market deterioration, Countrywide agreed to a $4 billion buyout by

Bank of America

(BAC) - Get Report

in January, which is set to close during the third quarter. The deal will create the largest U.S. mortgage company.

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