Consumer Lending

Countrywide Financial Corp. on Thursday said first-quarter profit fell 37 percent, and it cut its 2007 earnings forecast, reflecting difficulties for the largest U.S. mortgage lender in a weakened housing market.

Net income for Calabasas, California-based Countrywide, which competes with Fannie Mae and Bank of America, fell to $434 million, or 72 cents per share, from $683.5 million, or $1.10 per share, a year earlier. Revenue fell 15 percent to $2.41 billion.

Analysts on average had expected profit of 77 cents per share on revenue of $2.51 billion, according to Reuters Estimates.

Reuters via CNNMoney

After years of piling debt on their homes, Americans are becoming more cautious about using them as a piggy bank.

A cooling housing market and higher interest rates have made homeowners more reluctant to tap the equity they may have built up in their residences. The amount borrowers owe on their home-equity lines of credit has slipped in the past six months, to $561 billion at the end of March, the first such decline since 1999, according to new data from Equifax Inc. and Moody’s Economy.com Inc. Although that decline was partly offset by a pickup in fixed-rate home-equity loans, total home-equity borrowing rose just 9% in the 12 months through March, well below the 21% average annual growth rate of the past five years.

During the housing boom, demand for home-equity lines of credit climbed sharply as property values rose, interest rates fell and lenders made it easy for borrowers to tap their equity for everything from home improvements to vacations. Borrowing against home equity freed up roughly $187 billion in cash per year between 2001 and 2005 that was used to pay off other debts and for new spending, according to a recent paper by former Federal Reserve Chairman Alan Greenspan and Fed economist James Kennedy.

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Up a seasonally adjusted 3.6% from last week and 18.2% from the same week last year. This is the first increase in six weeks.

Mortgage Bankers survey

New Century Financial Corp. won bankruptcy court approval Tuesday to proceed with the sale of its key loan origination unit in a swift auction that will end next week.

U.S. Bankruptcy Judge Kevin Carey in Wilmington, Del., said he will sign an order approving the auction, at which the company will seek offers of at least $1 million. Offers for the unit, which stopped making loans last month, are due May 2.

Reuters via CNNMoney

Groups representing 300 banks plan to file a class-action lawsuit against U.S. retailer TJX Cos. Inc. over a security breach involving data from millions of credit and debit cards, an industry body said on Tuesday. The lawsuit to be filed in U.S. District Court in Boston by the Massachusetts Bankers Association on Wednesday will seek at least “tens of millions of dollars” in damages, said Bruce Spitzer, a spokesman at the association.

The Connecticut Bankers Association, the Maine Association of Community Banks and individual banks are joining the lawsuit as co-plaintiffs, the association said.

Massachusetts-based TJX, which operates the T.J. Maxx and Marshalls chains, said last month that information from 45.7 million credit and debit cards was stolen in a computer security breach over 18 months through mid-January.

Reuters

Sallie Mae, a student loan company that last week agreed to sell itself to private equity firms and banks, said Tuesday that first-quarter earnings fell, hurt by wider losses on derivatives and hedging.

Sallie Mae said quarterly earnings fell to $116 million, or 26 cents per share, from $152 million, or 34 cents, a year earlier.

Even ignoring items like changes in derivatives’ value, Sallie Mae earnings fell to $251 million, or 57 cents a share, compared to $287 million or 65 cents, a year earlier.

On that basis, analysts, on average, had expected quarterly earnings of 75 cents.

Reuters via CNNMoney

Bank of America Corp. agreed to pay $21 billion for ABN Amro Holding NV’s LaSalle Bank Corp. unit, filling a big hole in its nationwide branch network by becoming Chicago’s largest bank, and also becoming the biggest bank in slower-growing Michigan.

The all-cash purchase will give Bank of America, the second-largest U.S. bank, 141 new branches in the Chicago area, 264 in Michigan and six in Indiana, as well as about 1,500 automated teller machines and about $113 billion of assets.

Reuters via CNNMoney

Capital One Financial Corp. said Thursday first-quarter profit fell 24 percent, and cut its full-year earnings forecast, citing mortgage banking weakness, sending shares down 4.3 percent after hours.

Net income for the fourth-largest MasterCard and Visa card issuer fell to $675.1 million, or $1.62 per share, from $883.3 million, or $2.86, a year earlier.

Capital One projects 2007 profit at $7 to $7.40 per share, down from the range of $7.40 to $7.80 it forecast in January.

Reuters via CNNMoney

American Express Co. said Thursday first-quarter net income for the three months ended March 31 rose 21% to $1.06 billion, or 87 cents a share, from $873 million, or 69 cents a share in the year-ago period. Income from continuing operations rose to 88 cents a share from 70 cents a share. Consolidated revenue net of interest expense rose 10% to $6.7 billion from $6.1 billion. Analysts surveyed by Thomson First Call forecast earnings of 80 cents a share, on average.

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