April 29 (Bloomberg) -- Countrywide Financial Corp., the mortgage lender that Bank of America Corp. plans to buy, reported a third straight quarterly loss as late payments and home foreclosures escalated.

The net loss was $893 million, or $1.60 a share, compared with a profit of $434 million, or 72 cents, in the year-earlier period, the Calabasas, California-based company said in a statement today.

Countrywide's losses aren't enough to prompt Bank of America to abandon its bid, said Credit Suisse Group analyst Moshe Orenbuch. Countrywide trades for about 15 percent less than shareholders would get if the stock swap were completed today, reflecting investor concern that Bank of America may demand a better price or cancel the sale, valued at about $4 billion.

``It's not likely to deteriorate enough to derail the deal,'' said Orenbuch.

Countrywide gained 2 cents to $5.85 at 4:01 p.m. in New York Stock Exchange composite trading. The lender has declined about 85 percent in the past 12 months, with Chief Executive Officer Angelo Mozilo, 69, presiding over the company's first annual loss in more than 30 years.

U.S. foreclosure filings more than doubled in the first quarter as payments rose for subprime adjustable mortgages, according to data vendor RealtyTrac Inc.

Bank of America, the nation's second-biggest bank by assets behind Citigroup Inc., said April 21 that the sale, announced in January, remains on course for completion in the third quarter. The Charlotte, North Carolina-based bank dropped 32 cents to $37.86 and has slumped about 25 percent over the past year.

Combined Operations

The combination would make Bank of America the biggest U.S. mortgage lender, handling about one out of every four home loans. The bank ranked fifth in 2007, according to trade publication Inside Mortgage Finance.

Countrywide, the biggest mortgage lender by value of loans last year, posted a $703.5 million loss for all of 2007 because of higher loan losses and writedowns of securities backed by home loans.

``The problem with Countrywide is that it comes with this portfolio that was not underwritten correctly and is very sloppy,'' said Paul Miller, an analyst at Friedman Billings Ramsey & Co., in an interview with Bloomberg Television. Miller expects Bank of America to end up buying Countrywide at a lower price than originally negotiated.

Credit Losses

Provisions for credit losses were $1.5 billion in the first quarter, compared with $925 million in the preceding quarter and $158 million in the year-earlier period. Results included $441 million of impairment charges tied mostly to home-equity securitizations.

Loan originations increased 6 percent to $73 billion.

Countrywide wrote down $390 million of assets amid ``disruption in the capital markets and declining liquidity'' for mortgages that aren't eligible for sale to Fannie Mae and Freddie Mac, the two largest U.S. providers of financing for home loans, the company said.

About 43 percent of Countrywide's $87 billion loan portfolio is in California, followed by 7 percent in Florida, the company said in a Feb. 29 regulatory filing. California had the nation's sharpest price decline in the fourth quarter, 6.6 percent, the Office of Federal Housing Enterprise Oversight said Feb. 26. Nevada dropped 5.9 percent and Florida slid 4.7 percent.

Home Prices

Home prices in 20 U.S. metropolitan areas fell 12.7 percent in February from a year earlier, the most on record, according to the S&P/Case-Shiller home-price index today. The gauge has fallen every month since January 2007. Falling home prices contribute to increased foreclosures as more property owners are unable to sell or refinance without losing money.

Net revenue more than doubled at Countrywide during the U.S. housing boom of 2002 through 2006 as the company loosened underwriting standards to compete for borrowers. That led to rising defaults, said the lender's president, David Sambol, in October.

The Federal Reserve is holding hearings on the sale to Bank of America amid complaints from regulators and lawmakers that lax lending standards contributed to record defaults. Bank of America plans to modify at least $40 billion of mortgages during the next two years, a move that may help as many as 265,000 homeowners, the company said yesterday at a hearing in Los Angeles.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net

Last Updated: April 29, 2008 16:15 EDT