Countrywide Financial announced this morning that August mortgage loan fundings fell 17% from the year-ago period to $34 billion. Average daily mortgage loan application activity for August was $2.3 billion, down 12%. The mortgage loan pipeline was $52 billion at August 31, down from $64 billion for the same period last year.
In a statement released by the company, CFC stated that Looking forward, the company expects that it will be a long-term beneficiary of the current conditions and corrections in the mortgage industry, and we are confident that the actions which we have taken in response to the current environment will position us for profitable future growth and success.
The shares of CFC have gapped more than 7% higher this morning after losing 1.5% on Wednesday. The stock's upside, however, has been halted by its 10-day moving average this morning. This trendline in tandem with the security's 20-day moving average has guided the equity lower since late May. During this time frame, the equity has shed more than 56%.
Options players have grown more optimistic about the security's prospects recently. Schaeffer's put/call open interest ratio has declined from 1.91 on August 16 to its current perch of 1.48. This reading is lower than 89% of all those taken during the past year. In other words, short-term options speculators have been more optimistically aligned toward the shares only 11% of the time during the past 52 weeks. In fact, since August 16, call open interest in the September and October series has increased by 17% while put open interest has dropped by 9%.