Letters to the Editor
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Who says...
That it can't be both?
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All Three ...
Good PR , slow the REOs and take the heat off of Mozzilo ...
Probably won't work , but what the hay.
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Illegal lending practices
Most of the loan practices created since the incursion into Iraq were illegal for reason that are now obvious. Why were they not allowed prior to the invasion? If Congress wants something to hang the Bush bunch for, this should be it. Someone should be jailed for promoting this idiocy.
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Rescue for Countrywide, but homeowners in trouble need it
While I agree with you Countrywide needs to find a way to rescue itself, this bailout plan is long overdue and should be copied by other lenders. Under the old process, lenders won't even talk about loan modification until a loan is at least 60 days late. By then a borrower's credit score has been ruined and they can't refinance.
Countrywide says it plans to reach out to people with loans about to reset (and in many cases double a person's mortage payment) and work with them to modify or refinance that loan. They're putting their money where there mouth is by announcing that they will work with the Neighborhood Assistance Corp of America, which recently called for a boycott of Countrywide for its predatory lending practices.
Remember most of these loans were sold on teaser rates with promises from real estate agents and mortgage brokers that they could easily refinance before the loan resets. No one dreamed at that time the housing bubble would burst. Countrywide is not the only player here. There are lots of people with responsibility for the mess we are in.
If Countrywide helps itself with this plan, I don't see that as a problem as long as people are given reasonable ways to fix their financial problems and stay in their homes.
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I'm not sure where I stand...but
For sure, this bailout is NOT about doing the right thing. It is about saving the company. The mortgagees are important only in their ability to keep sending Countrywide money every month. Clearly, the reporter points this out in all of the extra "help" Country wide offers him as they try to keep cash flowing. What bothers me most about all this sub-prime talk is how we are focused on the symptom, not the disease. Sub-prime by definition tells us a lot of things.
First, sub-prime means the mortgage holders cannot meet traditional standards for a number of reasons: no savings or poor or spotty credit history. Creative mortgages are devised to give these people a chance at a home. It's like giving crack to an addict. They aren't going to handle it responsibly. History says so, and as for the low to no savings, well, that is a problem unto itself.
Second, sub-prime is like going to the casino and expecting a big payday, only to find out the house wins most of the time. In the case of sub-prime lending, no one really wins other than the person coming in to mop up the mess and buying at auction. You can be sure lots of sub-prime mortgage holders never intended to hold the home. They intended to sell it and turn a profit and start over.
This mess also speaks to the over priced cost of a home today. Easy money inflated builders abilities to raise the price and for existing homes to sell at a premium. Again, just another happy trip to the casino for all on the bus, but now everyone involved rides home with little or no cash.
There is a cultural norm in America of entitlement and corporate greed. This is the fruits of our ill conceived labor.
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At least they are doing SOMETHING
As a former mortgage broker, I can promise you this. If a person didn't get their subprime mortgage from Countrywide, the would have gotten it somewhere else. For a few years, lenders were rolling out products - 100% loan, no income documentation with a 580 credit score!! - that literally made me and my co-workers scratch our heads in astonishment. Anyone could buy a home, and did.
I am not saying that completely excuses Countrywide, but to a degree, they were just trying to keep up with the Joneses.
So now they are trying to fix a problem that they certainly brought on themselves, just as the whole industry has. But how many other lenders are trying to do this? Give Countrywide credit - they are trying to do something. Is it also in their interest? Of course. But when the auto industry is ailing and they offer rebates to their customers, thereby helping both the consumer and themselves, we consider this to be a normal part of business.
Give Countrywide just a smidgen of credit here - they are a publicly traded company that has royally screwed up but refuses to throw in the towel. Trying to repair the damage done to both their shareholders and their customers is not a bad thing.
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Sub-prime borrower here
The premise that subprime borrowers are irresponsible and shouldn't have bought a house fails to take into account people like me and my husband. Both of us have credit scores over 650, but were stuck in a situation where we were moving between states, neither of us had jobs in the state we were moving to, and had no savings. I will concede that the savings issue is a tough one. However, we bought something we could afford and had employment within days of moving back (a couple months for my husband). We did refinance ASAP out of that loan since it had a blended rate of about 11% (!).
Keep in mind that many self-employed people, like my husband previously was, have a hard time qualifying for conventional loans, especially if they are in a field where they write off a good deal of their income. Lenders are a little funny when your tax returns shows a net of "no income" for one borrower!
We had Countrywide as a servicer on one of our loans and they were an absolute NIGHTMARE to deal with.
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They must have changed their tune
Thrre years ago, I fell 3 months behind on my Countrywide mortgage due to a job loss. Once re-employed, I was ready to work out some repayment plan with them. No dice. They wanted all the money at once, or they would forclose. They were not at all interested in helping me, and were really nasty about it. I had to file chapter 13 to save the place. I later learned that Countrywide was notorious for not cooperating with homeowners who have fallen behind on their payments. I'd like to think their current predicament is a classic case of divine justice. I get a resentment everytime I hear the word Countrywide.