Countrywide Financial Corp. was one of the largest mortgage lenders in the United States during the housing boom. Its aggressive expansion into subprime lending left the company heavily exposed when the market turned. This article summarizes key points from our 2007 coverage of Countrywide’s subprime exposure and the factors that contributed to its demise.
**Background and Growth of Subprime Lending**
Countrywide expanded into riskier subprime loans to maintain market share. It originated and purchased billions in loans through its Full Spectrum and Countrywide Home Loans divisions. These loans were often packaged into mortgage-backed securities and sold to investors.
– Countrywide issued adjustable-rate mortgages with teaser rates and minimal documentation.
– By 2007, the company held nearly $34 billion in pay-option ARMs and home equity lines of credit.
– Subprime delinquencies and defaults began to spike in early 2007 as teaser rates reset.
**Impact of the Credit Crisis**
The collapse of the subprime market sent shockwaves through Wall Street and forced lenders to tighten underwriting standards. Countrywide faced liquidity problems as investors shunned mortgage-backed securities.
– Warehouse lenders cut off funding as losses mounted.
– Countrywide drew down an $11.5 billion credit line to stay afloat but struggled to sell its loans.
– Regulators and investors began scrutinizing its lending practices.
**Aftermath and Acquisition**
By early 2008, Countrywide was on the verge of bankruptcy. Bank of America announced plans to acquire the troubled lender in January 2008.
– The acquisition closed in July 2008; Bank of America later faced billions in legal settlements.
– Countrywide’s collapse remains one of the largest failures in mortgage history.
**Internal Links and Further Reading**
For more context on the broader crisis, see our article on the [Subprime Mortgage Crisis Analysis 2007](https://www.mortgagedaily.com/subprime-mortgage-crisis-analysis-2007/). To explore failed lenders and the wider impact on the industry, visit our [Mortgage Graveyard](https://www.mortgagedaily.com/mortgage-graveyard/) archive.
—
*Archived reporting from 2007, updated on October 12, 2025 for continuity.*
