Countrywide Unable to Sell Paper

For a few days we took reassurances from Countrywide as a good sign. The lagest mortgage lender in the United States reassured everyone with glowing statements about having billions in liquidity and low exposure to subprime. Now Countrywide is singing the mortgage blues anyway.

Shares of Countrywide Financial Corp., the largest U.S. home lender, fell more than 15% in pre-market trading on Friday after it said problems in the U.S. mortgage market poses a serious threat to its earnings and financial condition. The company, which makes money providing mortgages and then reselling them to investors, said the markets’ reluctance to buy mortgages right now is causing it to retain a greater proportion of mortgage loans than it sells.