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
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.
Bank of America
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%.
Countrywide tapped its entire $11.5 billion credit line in August to ensure it had enough liquidity to fund loans and said that future mortgage originations would also get funded through its banking subsidiary.
The company has also been cutting its workforce. Countrywide recently announced plans to cut as many as 12,000 jobs, slashing its workforce by 20%.
Like other lenders, until the markets for secondary mortgage products improve, Countrywide is only funding loans that are able to be sold to Fannie Mae or Freddie Mac or that could be held in its loan portfolio.
Mortgage servicing was a bright spot for the struggling lender. Countrywide's mortgage loan servicing portfolio totaled $1.5 trillion at the end of the month, an increase of 18% from the year-earlier period.
"The company's recent actions to secure additional funding, as well as the migration of funding its originations through the thrift should substantially address funding concerns at the company," writes Moshe Orenbuch, an analyst at Credit Suisse. "As origination volumes and mortgage pipeline decline over the coming months, we expect the stress on its funding needs should subside significantly from current levels."
A Countrywide spokeswoman did not immediately return a call for comment.
Shares rose $1.56 to $18.18.