Countrywide denies BK rumors

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URGENT
By ALEX VEIGA,
AP
Posted: 2008-01-08 14:10:36
LOS ANGELES (AP) - Shares of Countrywide Financial
Corp., the nation's largest mortgage lender, partially recovered from a
midday plunge Tuesday after the company denied rumors that it was
planning to file for bankruptcy protection.
In a prepared statement, the company said there was "no substance to the
rumor that Countrywide is planning to file for bankruptcy, and we are
not aware of any basis for the rumor that any of the major rating
agencies are contemplating negative action relative to the company."
Countrywide stock dipped as low as $5.76 before the New York Stock
Exchange temporarily halted trading in advance of the company's
statement. The decline sent stocks overall lower.
When trading resumed, the shares rebounded somewhat and were down $1.07,
or 14 percent, to $6.57 in afternoon trading.
The stock fell early in the day following a report in The New York Times
that said court records show the lender fabricated
documents related to a bankruptcy case of a borrower in Pennsylvania.
Other Countrywide actions in borrowers' bankruptcy cases have come under
scrutiny in the past.
The U.S. Trustee launched an inquiry last fall to investigate whether
the lender's claims against two South Florida borrowers seeking
bankruptcy protection violated bankruptcy laws.
Investors have been particularly anxious about Countrywide in recent
days. Its stock is well below its 52-week high of $45.26.
Countrywide, like many in the mortgage industry, has suffered as more
customers have defaulted on home loans, particularly on those made to
borrowers with questionable repayment histories.
The Calabasas, Calif.-based company reported a $1.2 billion loss in the
third quarter of last year, but management forecast a profitable fourth
quarter and 2008.
Wall Street analysts are skeptical the company will be able to deliver
on its projection, amid ongoing home-price declines, an expected new
wave of mortgage defaults this year, and lingering problems with credit
markets.
Erik Clark
Borowitz, Lozano & Clark, LLP
100 N. Barranca Avenue, Suite 250
West Covina, CA 91791
Office: (626) 332-8600
Fax: (626) 332-8644
eclark@BLClaw.com
www.BLClaw.com
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