NEW YORK — Countrywide Financial Corp. , the largest U.S. mortgage lender, said Thursday it has lined up $12-billion (U.S.) of financing to help weather a housing slowdown that has reduced loan demand and will lead to widespread layoffs.
Shares of Countrywide rose as much as 9.8 per cent.
The company said it recently lined up the secured financing through new or existing credit facilities. On Aug. 16, it had drawn down $11.5-billion from credit lines because it was unable to sell short-term debt to fund regular operations.
Calabasas, California-based Countrywide also said it had funded $34.4-billion of mortgage loans in August, the fewest this year and down 17.3 per cent from a year earlier, as it tightened lending standards. Daily applications fell 11.8 per cent to $2.33-billion. Countrywide's pipeline of mortgages being processed fell 16.8 per cent from July to $51.8-billion.
Countrywide's success in finding new sources of capital ”should substantially address funding concerns,” Credit Suisse analyst Moshe Orenbuch wrote. “As origination volumes and mortgage pipeline decline over the coming months, we expect the stress on its funding needs should subside significantly.”
Representatives of Countrywide did not immediately return requests for further details on the new financing.
Countrywide shares were up $1.39, or 8.4 per cent, at $18.01 in afternoon trading on the New York Stock Exchange, after rising as high as $18.25.
Through Wednesday, the stock had fallen 60.8 per cent this year as defaults rose, home prices stopped increasing and investors grew unwilling to buy many kinds of home loans.
On Friday, Countrywide said it would fire up to 12,000 employees, or about 20 per cent, by December. Analysts said deeper cuts are possible. Staffing in August fell to 60,867 from July's 61,586, the year's first monthly decline.
Companies have announced well over 50,000 mortgage-related job cuts this year. On Wednesday, Memphis, Tennessee-based First Horizon National Corp announced 1,500 layoffs, mainly in mortgages, while Seattle-based Washington Mutual Inc. announced 1,000 mortgage-related job losses.
Countrywide this summer stopped making home loans that don't meet its own banking unit's investment criteria, or which aren't eligible to be securitized by such entities as Fannie Mae and Freddie Mac.
Less than 4 per cent of Countrywide's home loans in August were subprime, or intended for people with weak credit.
Last month, Countrywide received a $2-billion infusion from Bank of America Corp, which could eventually give the second-largest U.S. bank a one-sixth stake in the lender.
On Wednesday, U.S. Treasury Secretary Henry Paulson urged Countrywide Chief Executive Angelo Mozilo and other mortgage officials to help borrowers who took out adjustable-rate loans whose rates are resetting to higher levels.
Mr. Mozilo co-founded Countrywide in 1969, and his employment contract runs through 2009, when he will be 71. Critics have faulted him for taking too much lending risk and for cashing in tens of millions of dollars of stock options in 2006 and 2007 through a prearranged trading plan.
On Tuesday, employees sued Countrywide and Mr. Mozilo, saying the company's failure to warn of its deteriorating financial health cost them millions of dollars of retirement savings.
Chief Operating Officer David Sambol said in a statement Thursday that Countrywide was confident it will be a “long-term beneficiary” of current market conditions.
(Additional reporting by Tim McLaughlin and Christian Plumb)
