Mumbai: Countrywide Financial Corp, the biggest US mortgage lender, had bought most of the assets of another US mortgage lender HomeBanc Corp that filed for Chapter 11 bankruptcy protection, is now negotiating a second multi-billion dollar bail-out package, similar to last month''s deal with Bank of America Corp, (See: Countrywide gets $2 billion capital boost from Bank of America) the New York Post reported in its online edition.

The report named possible lenders as JPMorgan and Citigroup and a group of hedge funds.

California-based Countrywide received a $2-billion injection from Bank of America, helping the mortgage lender to come out of a liquidity crunch.

"Countrywide is in desperate need of cash right now to continue funding mortgages, and the credit markets are still largely closed to them," the report said.

Countrywide is working with Goldman Sachs and law firm Wachtell Lipton Rosen & Katz to structure another similar strategic investment, the Post reported, citing sources familiar with the development.

It''s unclear at this point who is involved in the investment, the report said. But a final deal could be announced by the end of the month, the report added.

Countrywide, meanwhile, said last week it would eliminate as many as 12,000 jobs, or 20 per cent of its workforce, after investors stopped buying loans and lenders alarmed by rising subprime defaults refused to provide capital to mortgage companies.

Countrywide handles one of every five new US mortgages. More than 100 mortgage companies have sought buyers, halted applications or closed since the start of 2006, hurt by falling prices and record foreclosures. Countrywide forecast last week that new US mortgages may fall 25 per cent below this year''s level.

"Actual reductions could be lower should the interest rate environment and related market volume outlook improve. Based on current interest rate levels, Countrywide presently expects that total market origination volumes will decline approximately 25 per cent in 2008 compared to 2007 levels," Countrywide said in a release.

The release also signals a changing course of direction for Countrywide. It has scraped almost its entire subprime loaning operation, and will focus on secondary market loans and/or "high quality prime loans" held in Countrywide Bank''s investment portfolio.

"As we carry out our plan, the company''s overarching focus is exactly where it has always been: to remain an industry leader in the US residential lending business…" CEO Angelo Mozilo Mozilo said in the release.

While still the country''s largest lender, Countrywide has seen its stock nosedive 55 per cent from three months ago, when all was seemingly well with the mortgage and credit markets. After the credit market turmoil erupted, Countrywide laid off 1,400 workers and tapped all $11.5 billion of its credit line.

And as bad loans mounted, AXA SA, one of Countrywide''s largest shareholders, cut its nearly 11 per cent share of Countrywide down to 4.1 per cent.

Countrywide''s shares have been hammered this month as a broadening crisis in the mortgage business cut off the company''s access to its usual sources of borrowing in the market. (See: Countrywide Financial stock slides on rumours of bankruptcy)

also see : General reports on Banks & Financial Institutions