US mortgage giant Countrywide Financial Corp has killed – for now – plans to create a sub-prime lending division in the United Kingdom.
In an interview with Mortgage Strategy Online last week, CFC chairman and chief executive Angelo Mozilo confirmed the idea has been put on hold, but promised the company would revisit the issue “some time during the next two years”.
Mozilo says Countrywide instead will focus its management resources on running its US business, a task that could prove challenging as mortgage rates continue to rise and loan volumes – refinancings in particular – decline.
The Countrywide CEO said he could not elaborate more on its UK plans at this time, but maintained the idea will indeed be looked at again.
Last June reports began to surface that Countrywide was considering entering the UK sub-prime market. The company had begun the search for executive talent to run the unit and at one point was shopping for office space.
It had hoped to gather sub-prime-related products through the intermediary market. The company had no plans to fund lower credit spectrum loans.
Countrywide planned to securitise its UK sub-prime production by forming a conduit. A few weeks ago, according to sources, the company decided to halt its overseas sub-prime plans.
Mozilo noted that Countrywide will remain a partner in Global Home Loans which processes and services loans in the UK. No changes are in store at that unit.
At the end of September GHL managed outstanding balances of $110bn (US). In the third quarter Countrywide earned $9.8m (US) from its overseas operations, a 21% increase from the same quarter last year. It had total third quarter earnings of $582m (US).
In the US Countrywide was the second largest funder of sub-prime loans in the third quarter, originating $11.9bn, according to figures compiled by National Mortgage News. Countrywide is also the nation’s largest overall residential funder. Through September it had originated $267bn, a 25% decline from the same period last year. In terms of originations 2003 was a record year for US lenders. Volume for this year is off by almost 30%.
Michael Bolton, director of mortgages at BM Solutions, was thought to have been provisionally given the top job at the new lender an allegation that he flatly denies.
He says: “Im flattered that so many in the industry think this to be the case but the fact of the matter is that this is simply not true. I am dedicated to BM Solutions. We are committed to ensuring that the UK mortgage market is a fair and good market on all counts and in all sectors.”