Chairman Mozilo's five-year plan

Countrywide Financial Corp.'s annual report, released today, provides some interesting stats going back five years. I've put some highlights into a single table. Click "continue reading" for table and discussion.

(click on image for full size)

Looking back in time, what stands out to me is how much last year's Countrywide's loan production resembles 2003. Conventional, conforming loans -- which fell out of favor during the boom -- once again represented the majority of loans. Note the huge drop in total residential loan funding in 2004, and the dramatic increase in the percentage of non-conforming and subprime loans that followed.

While much has been made of the boom in subprime lending, you can see Countrywide actually became much more dependent on conventional, non-conforming (jumbo) loans -- before the collapse of the secondary market for jumbo loans put an end to that last year. Note the massive growth in loans funded through Countrywide Bank, from $8.1 billion in 2005 to $211.9 billion in 2007, when debt markets dried up.

In looking at delinquencies and foreclosures in Countrywide's $1.45 trillion owned servicing portfolio, the more than two-fold growth in the delinquency rate on subprime loans, to 27.29 percent, is startling. But delinquencies on conventional loans also came close to doubling during that time, to 4.19 percent. I guess what's more interesting, or at least less often noted, is that the delinquency rate on prime home equity loans was eight times greater in 2007 than 2003.

And check out the rise in prime equity loans pending foreclosure. OK, 0.12 percent is only 12 out of 1,000 homes, but who goes into foreclosure on a prime home equity loan??? In 2003, only two in 1,000 borrowers were managing that feat, so there's been a six-fold increase there.

Another interesting trend: government loans have consistently had crummy, double digit delinquency rates. But while delinquency rates on all other loans have shot up, government loans have stayed pretty much unchanged. And if subprime and government loans had pretty much the same delinquency rates, at least until 2006, the percentage of government loans pending foreclosure has never been near that of subprime. In fact, the percentage of goverment loans pending foreclosure has hardly changed since 2003 and now compares quite favorably to conventional loans.

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