Countrywide Taps $11.5 Billion Credit Line

Thursday, August 16th 2007, 7:34 am

By: News On 6

CALABASAS, Calif. (AP) _ The nation's largest mortgage lender borrowed $11.5 billion from banks to fund new loans, in a move that shows just how deep the lending crisis has become.

Countrywide Financial Corp. said Thursday it made the move amid a credit crunch that has driven a number of its smaller peers to bankruptcy.

The secondary market for mortgages has all but disappeared in recent weeks as investors have worried about the value of loans and rising delinquencies and defaults.

Mortgage lenders rely on the secondary markets to borrow money to make more loans. The problems started as subprime mortgages _ loans given to customers with poor credit history _ started going delinquent and defaulting at faster rates.

The problems have spread to the broader mortgage market, making investors nervous about nearly all types of loans that cannot be purchased by Fannie Mae or Freddie Mac.

Such ``conforming'' loans are considered safer because Fannie and Freddie are government-sponsored entities. Countrywide said some 90 percent of the loans it originates from now on will be conforming loans or will meet its internal bank criteria.

Shares of Countrywide fell $1.29, or 6.1 percent, to $20 in premarket trading. Shares have traded between $19.25 and $45.26 during the past year.