Mortgage lender Countrywide seeks to reassure investors amid rating cut, bankruptcy rumors

: Countrywide Financial Corp., the biggest U.S. mortgage lender, sought to reassure investors Tuesday, declaring it have ample capital, entree to hard cash and is well-positioned to profit from the fiscal disturbance rocking the mortgage sector.

The company's statement came amid rumours the Calabasas, California-based company could be looking to seek bankruptcy protection and as its stock tumbled at one point more than 15 percent.

Countrywide shares drop 32 cents, or 3 percent, to $10.25. At one point, the stock had dropped to a low of $8.21. Over the past 52 weeks, the stock terms have ranged between $10.25 and $45.26.

"Countrywide Depository Financial Institution ... have sufficient liquidness available to ran into its proposed operating and growing necessitates and have accumulated important contingent liquidness in response to evolving marketplace conditions," the company said.

The loaner have shifted the majority of its loan support through its banking arm from gross sales on the secondary marketplace in the aftermath of the liquidness crisis that flustered fiscal marketplaces following a spike in place loan defaults this year. Today in Business

Countrywide also noted it anticipates its place loaning unit of measurement to be able to service debt beyond adjacent twelvemonth without having to buy further debt insurance.

The company said it had $35.4 billion (€23.94 billion) in hard cash available as of Oct. 31, 2007, up from $33.6 billion (€22.73 billion) in the former month.

Countrywide's stock terms diminution came as Fox-Pitt, Kelton analyst Leslie Howard Shapiro cut his evaluation on the company to "In Line" from "Outperform."

Shapiro noted in a research short letter that Countrywide's sufferings could decline if the Federal Soldier Home Loan Mortgage Corp., Oregon Freddie Mac, is forced to scale back how many loans it purchases from mortgage lenders.

On Tuesday, Freddie Macintosh reported it lost $2 billion (€1.35 billion) in the 3rd one-fourth and warned it may necessitate to diminish its concern unless it can raise new capital.

Like other mortgage lenders, Countrywide pools the place loans it arises and sells them to investing Banks and government-backed mortgage Banks such as as Freddie Mac.

Freddie Macintosh is the No. Two U.S. purchaser and surety of mortgages, after Federal Soldier National Mortgage Association, or Fannie Mae.

Shapiro speculated the government-sponsored mortgage financier's problems could ensue in less support for lenders, a critical blow at a clip when Wall Street investing Banks have got pulled back on mortgage-backed debt amid rising home-loan defaults.

A decrease in support from Freddie Macintosh would halter Countrywide's ability to arise loans, causing its loan volume to fall additional this year, Shapiro wrote.

Last week, Countrywide reported that its mortgage loan supports dropped 48 percentage to $21.9 billion (€14.8 billion) in October compared to the year-ago month.

The company posted a loss of $1.2 billion (€810 million) during the one-fourth ended Sept. 30.

Management said last calendar month the company would post a net income in the approaching one-fourth and adjacent year.

Still, Moody's Investors Service said Tuesday there is a possibility Countrywide will post losings in the 4th one-fourth of this twelvemonth and first one-fourth of 2008.

Quarterly losings would be tied to additional writedowns and expected additions in loan-loss commissariat in the approaching quarter, Craig Emrick, a frailty president on Moody's U.S. banking team, said during a conference call.

Moody's did not state it would take down evaluations at Countrywide if the loaner encountered future quarterly losses. It did however state it would reexamine how those losings impact working capital ratios to guarantee the depository financial institution is maintaining adequate liquidity.

As of now, Moody's said it makes not anticipate future losings "significantly impairing capital," based on emphasis diagnostic test scenarios Moody's usages to reexamine recognition ratings.

On Monday, Moody's reaffirmed its recognition evaluations for Countrywide, though it kept a negative mentality on the lender.

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