Countrywide Chief Fears Crowd Could Sink Subprime Market.

Park City, UT -- On the heels of a new report that found one in four home loans originated in last year's fourth quarter were subprime comes a renewed warning that one misstep by a mono-line nonprime lender could cast a pall over the entire mortgage business.

"I'm deeply concerned about what's happening" in the subprime sector, mortgage luminary Angelo Mozilo cautioned at the 2005 Midwinter Housing Conference here.

"This is the one aspect of our business that bothers me," the chairman of Countrywide Financial Corp., Calabasas, Calif., said. "It is spinning out of control and it could become a catastrophe."

Mr. Mozilo, a former president of the Mortgage Bankers Association, said his uneasiness is twofold - the rush to subprime by the lending community in general and the types of loans many are pushing.

"Everybody's in subprime," he said, citing an old Yiddish proverb that warns the ship could sink if too many people shift too far from the middle.

"When everybody goes to one side of the boat, the boat tips over," he said.

Ironically, Countrywide was the third-largest subprime originator in the fourth quarter, according to figures compiled by National Mortgage News and its affiliate, the Quarterly Data Report, funding $11 billion in B and C class loans. Countrywide is also the country's largest servicer of subprime loans, with a portfolio totaling $89 billion at year-end.