Originations Off at Two Biggest Independent Lenders

The two largest independent mortgage companies, Countrywide Credit Industries Inc. and North American Mortgage Co., both reported drops in origination volume last month compared to the levels in October 1995.

Countrywide funded $2.8 billion in loans in October, down 12%, while North American's production decreased 3% to $765 million.

This was the third consecutive month that originations were down for the two companies, but there were signs that volume may soon pick up at North American.

The company's loan applications increased 7% from last October's. John F. Farrell Jr., North American's chairman and chief executive, attributed most of the increase to a recent decline in interest rates - as refinancing represented 41% of the applications.

Although total fundings were down at Countrywide, originations increased in several divisions from September 1996 levels. Countrywide Credit's vice chairman, Angelo R. Mozilo, said that fundings in the company's wholesale division and consumer markets retail division increased 20% and 8%, respectively, from September to October.

And year over year, Countrywide continued to demonstrate strong growth in its subprime and home equity divisions. Home equity loan production more than doubled in October to $60 million and subprime funding was $97 million, up from $16 million in October 1995. Countrywide has been originating subprime loans through its wholesale division for just over a year and has just announced that it will be opening subprime retail offices.

On the servicing front, the two companies had different results. Countrywide's servicing portfolio continued to grow. At $152 billion, it was 15% higher than at the end of October 1995. But North American, which continues to sell off much of its servicing rights, had a servicing portfolio of $13.6 billion, down 9%.

In a separate announcement, Countrywide said it was selling Countrywide Asset Management Corp. to CWM Mortgage Holdings - the separately traded real estate investment trust managed by the unit. CWM operates Independent National Mortgage Corp., or Indy Mac, a conduit.

Countrywide will receive 3.6 million new common shares of CWM for the management company. These shares, combined with the 2.4% of CWM that Countrywide already owns, will give Countrywide about a 10% stake in CWM, making it the REIT's largest shareholder.

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