Countrywide Financial Corp. fell more than 10 percent in New York Stock Exchange trading after U.S. Senator Charles Schumer urged the Federal Home Loan Bank system to probe cash advances to the largest U.S. mortgage lender, Bloomberg News reports.
Schumer said he was alarmed by the volume of advances the system’s Atlanta bank has made to Countrywide considering “the rapid deterioration” in the credit quality of some of the Calabasas, California-based company’s mortgages. Schumer expressed his concerns in a letter sent today to Federal Housing Finance Board Chairman Ronald Rosenfeld.
The Atlanta bank has made $51.1 billion in advances to Countrywide as of Sept. 30, representing 37 percent of the bank’s total outstanding advances, Schumer wrote, citing U.S. Securities and Exchange Commission filings.
“The loans being pledged by Countrywide to secure these advances may pose a risk to the safety and soundness of the” 12 home loan banks, wrote Schumer, a New York Democrat.
Countrywide fell $1.01, or 10 percent to $8.64 in New York Stock Exchange composite trading at 4:01 p.m. The stock has fallen 80 percent this year.
