The mortgage behemoth has been trying to reassure and calm its creditors and shareholders amid soaring defaults on U.S. home loans that have curbed its funding sources while driving up its funding costs. Last month, it sought to beef up its finances with the sale of $2 billion of preferred shares to Bank of America Corp., giving the big bank the option of converting the preferred stock into a stake of about 16% in Countrywide.
On Thursday, Countrywide said it had taken "decisive steps" to adjust to the market turbulence by arranging the extra $12 billion in secured borrowing through new or existing credit lines. The new financing follows a deal it struck in August to borrow $11.5 billion through a line of credit from 40 banks to replace short-term, commercial-paper funding.
"We are confident that the actions which we have taken in response to the current environment will position us for profitable future growth and success," said David Sambol, president and chief operating officer of Calabasas, California-based Countrywide.
Countrywide also said it had cut its loan pipeline, which should lessen the stress on its near-term funding needs. Countrywide said it had $51.83 billion of in-process loans at the end of last month, down 19% from a year earlier and a 17% drop from the previous month.
In total, in August, the Countrywide made a total of $34.35 billion of home mortgages. Of that total, about 80% came from its banking unit, reflecting the company's move to rely on its deposit-taking savings bank to fund its lending, reducing its dependence on balky credit markets.
Countrywide also stated that it expects to cut its work force by as much as 12,000 jobs, or about 20%, in the next three months as the current market turmoil probably will reduce its lending volume next year by around 25% from this year's level. It had 60,867 employees as of August, up 8.9% from a year earlier but down 1.2% from July.