In a report today, the Mortgage Bankers Association said that delinquencies rose to over 5.5%, making them the highest they have been since 1986. Delinquencies, defined as being more than 30 days behind on mortgage payments, are seen as spelling future trouble for the housing market as many delinquencies turn into foreclosures, and an increase in foreclosures would further depress an already tough market for sellers.

Despite this news, the most prominent mortgage lender is up over 10% on the day. Countrywide Financial Corp. (NYSE: CFC), with a market capitalization of over $6 billion despite losing more than 80% of its value this year, is seen as being a major beneficiary of the recently announced federal plan to freeze the interest rates on some subprime mortgages as well as allow local governments to fund refinancing through tax-exempt bonds.

Both of these announcements are good news for Countrywide because it not only has significant mortgage portfolio holdings, which desperately need strengthening in the wake of rising foreclosures, but is also the major player in the mortgage origination industry and will greatly benefit from an increase in perceived housing market strength.

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