Countrywide Mortgage Servicing Profit More than Triples

Countrywide Financial Corp. (NYSE: CFC), the nation's largest mortgage lender, today reported a massive increase in mortgage servicing profit for the second quarter.

Profit from mortgage servicing more than tripled, with a 213 percent increase over last year, off-setting a 21 percent decline in mortgage production income. The company reported $279 million in servicing earnings. The first and second quarter combined earnings skyrocketed by nearly 400 percent to $528 million, over last year's $106 million.

According to Countrywide's earnings report, mortgage servicing rights improve as interest rates climb. “Since MSRs generally perform best in higher interest rate environments, management expects that earnings from these assets will, over the long term, act as a natural counter-balance against earnings from the loan production sector, which typically performs best in lower interest rate environments.”

Countrywide's loan servicing portfolio grew by 24 percent to $1.2 trillion and overall second quarter profit increased by 27 percent to $722 million. Countrywide ended the quarter with 7.8 million loans serviced, and $1.1 trillion in its MRS portfolio. The company's pipeline of mortgage loan appplications was down by 16 percent to $65 billion.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.