Countrywide, GMAC Highlight Slump

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Countrywide Financial Corp. and GMAC LLC, two of the nation’s biggest home lenders, lost a combined $1.5 billion in the first quarter, adding to evidence that the housing slump has deepened, Bloomberg News reports.


Countrywide, the mortgage lender that Bank of America Corp. plans to buy, lost $893 million, or $1.60 a share, as late payments and home foreclosures escalated. GMAC, which General Motors Corp. sold last year, lost $589 million, due largely to its mortgage unit.


“Prices are just basically plummeting and that just creates stress throughout the system,” said Chris Thornberg, president of Beacon Economics LLC in Los Angeles. “Falling prices are hitting every part of the market.”


Home prices in 20 U.S. metropolitan areas fell in February by the most on record, a report today showed, underlining an imbalance between supply and demand that shows no sign of abating. The S & P;/Case-Shiller home-price index dropped 12.7 percent from a year earlier. The gauge has fallen every month since January 2007.


Countrywide gained 12 cents to $5.95 at 2 p.m. in New York Stock Exchange composite trading. The lender has declined about 85 percent in the past 12 months. Cerberus Capital Management LLP now owns 51 percent of GMAC.



`Not Done Yet’


“We want to see the earnings turn around and see prices in a steady climbing pattern before we step into the fray,” said Barry James, who manages more than $2 billion as president of James Investment Research in Xenia, Ohio. “We’re not done yet.”


The loss at Countrywide, led by Chief Executive Officer Angelo Mozilo, 69, may not be big enough to prompt Bank of America to abandon its bid, said Moshe Orenbuch, a Credit Suisse Group analyst in New York. The transaction was valued at $4 billion when it was announced in January.


Bank of America, the nation’s second-biggest bank by assets behind Citigroup Inc., said April 21 that the sale remains on course for completion in the third quarter.


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