Two days after the largest provider of home mortgages in the U.S., Countrywide Financial (CFC), announced that slightly more than 1% of its home loans were in foreclosure, the company got more bad news on August 16 from a ratings agency. Moody's Investors Service downgraded the senior debt ratings of Countrywide Financial Corporation and Countrywide Home Loans, Inc. to Baa3, from A3, and the deposits of Countrywide Bank to Baa1, from A2.
Moody's says the downgrade was a result of Countrywide's announcement that it had "fully drawn its $11.5 billion in committed bank credit facilities due to severe disruptions in its access to unsecured debt, and to secured debt for assets other than Treasuries, agencies and conforming prime mortgages." Moody's reiterated that all of Countrywide's ratings remain under review for further downgrade.
On August 14, Countrywide said it had made 14% fewer home loans in July after tightening its lending standards, though mortgage loan volume was up 6% from July 2006; it also announced that mortgage applications fell 15% in July to a nine-month low. Over all, Countrywide accounts for almost one in every five home-mortgage loans made each year in the U.S.
As of the close of the market on August 16, Countrywide's stock price stood at $18.95, down 55% year to date.