Gary Gordon, a securities analyst at PaineWebber Inc., New York, recently downgraded Countrywide Credit Industries' stock to "neutral" from "attractive." He said Countrywide's shares are near a peak price and will face some difficulties. Mr. Gordon said he expects the role of mortgage banks to decrease as the market for mortgages continues to shrink and technology impinges on the role of the classic loan originator. At the beginning of March he valued Countrywide's loan production business at $200 million, reflecting the lender's $5 billion to $8 billion in retail loan origination volume. Although Countrywide reduced staff by 40%, production volume has fallen 50%, leaving production/cost ratios swollen, he said in his report.

Mr. Gordon also noted that an accounting change could affect Countrywide's earnings, with offsetting negative effects on wholesale and correspondent production sales, which account for 75% of the lender's earnings.

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