AP reports that Countrywide Financial Corp (NYSE: CFC) lost $893 million in the first quarter. That $1.60 a share loss was not exactly what analysts had forecast -- they were looking for a profit of two cents a share.

Meanwhile the LA Times reports that Countrywide CEO Angelo Mozilo took in $10.8 million and cashed out $121.5 million in stock gains as his company got hammered by losses on sub-prime loans in 2007. Mozilo also enjoyed perks worth $176,513, including $44,454 in rides on the company's jet; $23,755 in automobile use; $8,581 in country club dues; and $31,238 in company-paid tax and investment advice. Mozilo faces an informal U.S. inquiry into his stock sales.

And Countrywide's financial condition is deteriorating fast. It set aside a $1.5 billion reserve to cover loan up 62% from $925 million in the fourth quarter of 2007. Moreover charge-offs totaled $606 million during the first quarter. Fortunately, Countrywide has an exit strategy. In January, Countrywide agreed to sell itself to Bank of America (NYSE: BAC) for about $4 billion in stock. The question is whether Bank of America will pull out of the deal now that it sees the rising costs it will incur if it moves forward. Since Countrywide trades 15% below that takeout price, the market has its doubts.

Investors don't seem happy with today's announcement -- the stock was down 5% in premarket trading.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

It seems like we just cannot bust out of the current housing slump we have been in this year. Today we got more negative news, as the National Association of Realtors reported that sales of existing homes fell by 8 percent during the month of September.

September's drop is the largest one-month decline since all the way back in 1999, and resulted in home prices dropping yet again. During the month, the average price for existing home sales fell to $211,700. With this price drop, we have now seen prices fall 13 of the past 14 months, putting prices 4.2 percent lower than the same period last year.

Every segment of the country felt the pain last month, with the Northeast taking the biggest hit as sales dropped 10 percent. The West saw sales drop 9.9 percent, the Midwest experienced a 7 percent decline and sales in the South fell by 6 percent.

Figures released today in the Standard & Poor's Case-Shiller Home Price Indices illustrate the continuing malaise in the housing market. The index tracks the relative value of residential real estate in the U.S. by following the change in sale price of individual houses.

With a baseline of 100 in the first quarter of 2000, the 2nd quarter of 2007 index finished at 183.89, down 1% from the 1st quarter and 1.9% since the end of 2006. This represents the 4th consecutive quarter of diminishing value and a drop of 3.2% year over year, the biggest one-year drop in the 20 years of the survey.

Those communities suffering the worst decline over the past year, according to the report, are Detroit (-11.0%), Tampa (-7.7%), and Washington (-7.0%). Those that fared better included Seattle (+7.9%), Charlotte (6.8%), and Portland (+4.5%).

With so much negative news swirling around the housing market lately, it was a pleasant surprise to see some encouraging news surface today, showing that home sales rose in the month of July.

While we are still in a situation where home sales are down over ten percent from last year's levels, July saw a decent 2.8 percent jump in new home sales. This comes on the heels of a 4 percent drop during the month of June. Analysts had been expecting to see new home sales fall once again last month, so the increase, as small as it was, is definitely great news for the market.

Some of the reason why we are seeing the current increase in sales has to be attributed to falling prices for new homes. As I wrote about earlier this month, falling home prices should help to start to balance out the housing market, and hopefully this is starting to take effect.

Don't get me wrong... it's never good to be in an environment where people's homes are decreasing in value, but this may be just what the doctor ordered in order to bring buyers back into the market. The average price for a new home in July was $300,800, down from $311,300 during July of last year.

While there is no doubt that the housing market is still on very shaky ground, today's news is definitely a welcome treat, and hopefully signs of better things to come.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.

A neighbor in my middle-class neighborhood of $200-$400,000 homes recently bought two adjacent houses and bridged them to create a 10,000-foot, $1+ million mansion. I thought he was nuts, until I read the New York Times article that suggests this is the best price point in today's market.

No one quibbles that selling a modestly-priced home in virtually any American market today is an exercise in despair. According to a report on NPR yesterday, the country is sitting on a one and a half year supply of new homes. And the numbers seem to be getting worse for some new home builders (see Eric Buscemi's post on the cancellation numbers at Ryland).

The ultra-expensive spreads, such as the $165 million Hearst estate Peter Cohan blogged about yesterday, are also struggling on the sales block. The 'tweeners, though, such as gentrified Boston homes, generous Manhattan flats, or Gold Coast condos, seem to be bucking the trend.

So maybe my neighbor has the right idea. Perhaps the multitude of house-flipping shows on cable television will be replaced with home mergers, turning two modest homes into one gargantuan (and sellable) property. If our society's income is stratifying, the new wealthy will need their estates, and the rest of us, our wattle huts.