Mortgage behemoth Countrywide Financial reported a quarterly loss of over one billion dollars Friday, its first shortfall in 25 years, but projected profits ahead as conditions improve.
The largest US mortgage finance group, which has seen its finances ravaged by a persistent housing slump, disclosed a third quarter loss of 1.2 billion dollars compared with a profit of 648 million dollars for the same period a year ago.
"Results for the third quarter of 2007 reflect the impact of unprecedented disruptions in the US mortgage market and the global capital markets, as well as continued weakening in the housing market," Countrywide's chairman and chief executive, Angelo Mozilo, said.
The mortgage giant, which announced job cuts of 12,000 in early September, saw its earnings per share slump to a loss of 2.85 dollars during the quarter, from a profitable 1.03 dollars a year earlier.
Countrywide blamed its loss on a sharp drop in demand for loans and mortgage-backed securities, increased credit costs and charges associated with its jobs cuts and other restructuring plans.
The company booked a charge of 57 million dollars during the quarter for its ongoing restructuring.
Countrywide unveiled the state of its finances days after announcing it was seeking to throw a lifeline to tens of thousands of stretched borrowers as home foreclosures spike across the country.
The mortgage lender said Tuesday it was offering new terms to tens of thousands of customers, who might be struggling to meet their mortgage payments, to stave off the risk of foreclosure.
The effort involves restructuring loans totalling around 16 billion dollars.
Executives expressed optimism that California-based Countrywide would return to profitability during the final three months of the year.
"We view the third quarter of 2007 as an earnings trough, and anticipate that the company will be profitable in the fourth quarter and in 2008," said David Sambol, Countrywide's president and chief operating officer.
Sambol said Countrywide would be able to return to profitability as it completes its restructuring which he said should help cut costs.
The company's banking operations, which rank it as one of the country's largest Federal Savings banks, should also help shore up Countrywide's finances going forward, executives said.
