CEO Angelo Mozilo has a tendency to overstate market conditions - up or down - but when he said during today's three-hour conference call that "we are experiencing home price depreciation almost like never before, with the exception of the Great Depression''... well, that's bound to get investors' attention. And it did - Countrywide's 33 percent drop in second-quarter net income played a leading role in today's 226-point Dow loss. (Bloomberg) But it wasn't just the lousy quarter - it was the sour outlook for the rest of 2007. Mozilo said "difficult'' conditions caused by the subprime mortgage defaults may persist, and demand is unlikely to rebound until 2009. That's a long time to wait. Not helping matters is that more borrowers are falling behind on home-equity loan payments. All told, the Calabasas, Calif.-based company set aside almost five times as much money for loan losses this quarter compared with a year earlier (of the $292.9 million earmarked to cover losses, $181 million is related to prime home-equity loans).

There's another slant on the Countrywide situation, as reported by MarketBeat. In March, insider sales hit the highest quarterly level in the past five years - and the sales happened when its share price was tumbling due to concern about the impact of rising mortgage loan defaults. Stock falls, sales surge - a little strange, no? On Monday, according to AP, Mozilo exercised options for 70,000 shares of common stock under a prearranged trading plan. That was before today's 10 percent drop (Countrywide's biggest decline in almost three years).