- The Washington Times - Wednesday, January 9, 2008

LOS ANGELES (AP) Shares of Countrywide Financial Corp., the nation’s largest mortgage lender, plunged yesterday after the company denied rumors that it was planning to file for bankruptcy protection.

The stock fell $2.17, or 28.4 percent, to $5.47 after sinking to a 52-week low of $5.05.

In a prepared statement earlier in the day, the company said there is “no substance to the rumor that Countrywide is planning to file for bankruptcy, and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the company.”

In morning trading, Countrywide stock dipped as low as $5.76 before the New York Stock Exchange temporarily halted trading in advance of the company’s statement. The decline sent stocks overall to lower levels.

When trading resumed, the shares rebounded somewhat before tumbling again.

The stock was shaken by a report in the New York Times that said court records show the lender fabricated documents related to a bankruptcy case of a borrower in Pennsylvania.

Other Countrywide actions in borrowers’ bankruptcy cases have come under scrutiny in the past.

The U.S. Trustee launched an inquiry last fall to investigate whether the lender’s claims against two South Florida borrowers seeking bankruptcy protection violated bankruptcy laws.

Investors have been particularly anxious about Countrywide in recent days. Its stock is well below its 52-week high of $45.26.

Countrywide, like many in the mortgage industry, has suffered as more customers have defaulted on home loans, particularly on those made to borrowers with questionable repayment histories.

The Calabasas, Calif.-based company reported a $1.2 billion loss in the third quarter of last year, but management forecast a profitable fourth quarter and gains this year.

Wall Street analysts are skeptical the company can deliver on its projection, in the face of ongoing home-price declines, an expected new wave of mortgage defaults this year and lingering problems with credit markets.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide