Lender’s mortgages drop 48%

Countrywide Financial Corp. on Tuesday said its monthly mortgage volume fell 48% in October from a year earlier as it all but stopped making sub-prime loans and sharply cut back on home equity lines of credit.

Meanwhile, delinquencies on the mortgages for which Calabasas-based Countrywide handles the billing and other services continued to mount.

The company’s shares jumped 53 cents, or 4%, to $13.72 as financial stocks led the broader stock market to a strong rally.

Countrywide stock is down 68% this year.

The lender said it funded $22 billion in home loans last month, down from $41.9 billion a year earlier but up 4% from September’s $21.2 billion.

The company’s volume of riskier loans fell significantly. Adjustable-rate lending totaled $3.1 billion, down 81% from a year earlier and 19% from September.

Sub-prime loans, which go to people with poor credit, totaled just $42 million in October, down 84% from September and 99% from $3.3 billion a year earlier.

Home equity loans totaled $1.36 billion in October, down 15% from September and 68% from a year earlier.

In Countrywide’s $1.47-trillion loan servicing portfolio, which includes mortgages owned by other companies, delinquencies as a percentage of unpaid principal rose to 5.94% in October from 5.85% in September and 3.97% a year earlier.

The pending foreclosure rate dipped to 1.23% from September’s 1.27%, and was up from 0.58% a year earlier.

Last month Countrywide reported a $1.2-billion third-quarter loss but said it expected to be profitable in the fourth quarter and in 2008, despite a projected 30% drop next year in U.S. mortgage volume.

In Tuesday’s report, Countrywide said its bank unit had deposits of $106 billion as of Oct. 31, up $1 billion from the previous month.