Countrywide Exec Testifies on Subprime Lending

A senior Countrywide Financial Corp. executive told the Senate Banking Committee in Washington today that declining home prices could result in record levels of mortgage loan foreclosures on subprime loans. Sandy Samuels, executive managing director and chief legal officer at Calabasas-based Countrywide, told the committee in a prepared statement that subprime loans taken out last year could result in foreclosure rates as high as 10 percent, the foreclosure rate on similar loans taken out in 2000. Samuels added that more than 90 percent of Countrywide’s subprime borrowers will not lose their homes to foreclosure. The subprime market accounts for 7 percent of Countrywide’s home loan volume, lower than the overall market, where subprime loans account for 20 percent of all mortgage loans, Samuels said. Samuels was cautioning the committee not to impose overly harsh restrictions on subprime mortgages lest many would-be homebuyers be locked out of the market. But Sen. Christopher Dodd, the banking committee’s chairman, noted that 2.2 million homeowners could lose their homes in the next few years as a result of what he described as lax oversight of these types of loans.