Countrywide reports November 2005 Operational Results.

Mortgage loan fundings for the month of November were $42 billion, a 35 percent increase from November 2004. Year-to-date mortgage loan fundings totaled $447 billion.

This is what caught my eye however:

• Pay-option loan fundings for the month were $7.9 billion, as compared to $4.1 billion in November 2004.
• Interest-only loan volume was $8.9 billion for the month of November 2005, which compares to $5.9 billion, for the same period a year ago.
• Nonprime loan fundings totaled $3.9 billion in November, which compares to $3.5 billion for the same period last year. Year-to-date nonprime fundings were $40 billion.

Total assets at Countrywide Bank totaled $72 billion at November 30, 2005, an increase of 86 percent from November 30, 2004.

That’s actually a stunning increase in “assets”.

But what did they do with their riskiest loans?

• Of the $7.9 billion in pay-option loans in November 2005 Countrywide Bank retained $1.5 billion of them.
• Of the $8.9 billion in interest only loans in November 2005 Countrywide Bank retained $0.3 billion of them.

If my math is correct, Countrywide managed to pass $15 billion out of $16.8 billion (89.29%) of their riskiest loans on to investors starving for yield.

As long as the trash can be passed, predatory lending practices will continue. The gig will be up when the appetite for such risk sinks, most likely during a “credit event” in 2006.

Mike Shedlock / Mish/