If Countrywide is the root of all mortgage evil, why aren’t its numbers worse?

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Gretchen Morgenson has a big piece on Countrywide’s mortgage-lending practices in Sunday’s NYT. She makes them look really bad:

Countrywide’s entire operation, from its computer system to its incentive pay structure and financing arrangements, is intended to wring maximum profits out of the mortgage lending boom no matter what it costs borrowers, according to interviews with former employees and brokers who worked in different units of the company and internal documents they provided.

You could fairly say that the aim of virtually every large corporation in America is to wring maximum profits no matter what it costs customers, so that in itself isn’t much of a revelation. Morgenson’s article does make clear that, in trying to keep up profits and growth, Countrywide gave its salespeople incentives to push borrowers into higher-cost loans than they could have qualified for. That’s bad, and it’s also of sad in light of Countrywide’s history: In its first go-round as America’s biggest mortgage lender, in the early 1990s, Countrywide distinguished itself in part with its no-commission policy. Its salespeople were on salary, and thus presumably had no incentive to push people into bad loans. That changed in the late-1990s as bank and thrift mergers knocked Countrywide down the list of the biggest lenders and CEO Angelo Mozilo clawed his way back to No. 1 in part by turning his company into just another aggressive, commission-driven mortgage lender.

But were Countrywide’s practices worse than the norm? Morgenson’s article certainly leads one to believe so, but when I look at the delinquency and foreclosure rates Countrywide reported for July–delinquencies at 5.1% of loans serviced and foreclosures at 0.79%–and compare them to the national averages reported by the Mortgage Bankers Association for the first quarter–delinquencies at 4.84% and foreclosures at 1.28%–and they look, well, average. Better than average, given that they’re four months further into the mortgage crunch.

Update: Paul Lukasiak points out in the comments that the Countrywide delinquency/foreclosure numbers are for its entire servicing portfolio, which includes lots of loans sold by other firms, so they don’t really prove anything one way or the other about its loan sales practices.

One other interesting stat, from National Mortgage News. Countrywide’s loan originations, both subprime and overall, were actually down in 2006. In subprime that was true of almost everybody: The only top-10 subprime lender whose originations were up for the year was GE’s WMC Mortgage. But of the top 10 mortgage originators overall, CitiMortgage, IndyMac and GMAC-RFC were all up sharply while Countrywide’s originations were down 7%. In low-documentation Alt-A loans, Countrywide was simply not a big player last year (it did become one in the first quarter of this year, as others fell by the wayside), and it was ratcheting back its use of interest-only loans. Who was headed in the other direction? Most dramatically it was IndyMac, in both categories.

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