Mortgage Loans Lender Hit by Subprime Crisis

Wed, 31 Oct 2007

Countrywide Financial, the largest mortgage lender in the US, has fallen into debt for the first time in 25 years following the sub-prime crisis. The last quarter saw a loss of £585 million, citing disruptions to the US mortgage and global capital markets for the loss. The main reason for the company’s losses is that it offered a number of high risk loan products. Furthermore, the value of loans originating in the last quarter fell from $118 million (£58 million) to $96 million (£47 million).

However, the firm has predicted a return to profits by the end of the year, having withdrawn from the sub-prime sector and cut roughly 10,000 jobs. This confidence has seen share prices rise from $1.89 to $14.96, though this is still a long way off their February peak value of $45.
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