Countrywide Credit Industries, Pasadena, Calif., passed a milestone in July when its mortgage servicing portfolio went over the $100 billion mark.
While loan originations have been falling sharply industry-wide, prepayments have also slowed to a crawl and servicing portfolios are continuing to grow, though slowly.
Countrywide said its prepayments dwindled to about $500 million in July, representing an annualized rate of about 6%.
On the originations side, the company funded $1.9 billion in loans for the month, down sharply from $4.3 billion a year earlier and $2.1 billion in June. David Loeb, chairman, said purchases - already at $16 billion for the fiscal year that began March 31 - accounted for much of the servicing growth. Many other lenders, caught in a profit squeeze, have been selling servicing to prop up earnings, and Countrywide has found the prices attractive.
"On the production front, difficult conditions persist as interest rates remain at relatively high levels .... These conditions continue to depress our volumes and induce keen price competition .... which negatively affects our margins," Mr. Loeb added.
Refis amounted to just 17% of Countrywide's July volume. -- Edward Kulkosky