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“No one can do what Countrywide can”!


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2010 Mar 24, 8:04am   3,299 views  20 comments

by PaulLegge   ➕follow (0)   ignore (0)  

“No one can do what Countrywide can”!

Remember that happy and positive home loan campaign on TV. Month after month, year after year, it played on TV offering exotic home loan packages to many so that they could “tap” the equity in their house.

Not surprisingly, this slogan of lies and deception is still making promises. Somewhere in the cold dirt about 6 feet underground you can still hear the whispers. Even though Countrywide is now officially bankrupt (both financially and morally) and was taken over by the savvy Bank of America, it appears that there is a new round of bailouts that will be offered to select homeowners whose mortgage was originated with Countrywide.

If you have been paying your mortgage regularly every month as a contributing member of society, making good on your financial promises, living with Integrity, setting an example for the next generation and are perhaps feeling burdened by the tough financial times, then unfortunately you don’t qualify. And as a disclaimer, for everyone who has lost equity, jobs and/or suffered financially due to this crisis, I fully sympathize.

If you have had to undergo or are facing a short-sale or foreclosure, due to a difficult financial situation and have a loan that is not originated with Countrywide, then again, I’m sorry but you don’t qualify for what Countrywide can do!

Okay, let’s get to the good news. If you bought a house during the peak years of the housing market, and used Countrywide Financial to get either a coconut, mango or passion fruit home loan then you pass phase one. If you still have a paying job but have decided that you no longer want to make your house payment, then you pass phase two. If you have been squatting in your house without making a payment to the bank and have been saving thousands of dollars for at least 2 months and for some even years, then you pass phase three. If you pass all three tests then please feel privileged! Countrywide, Bank of America and the American tax-payers would like to indulge you with your strong stomach of self-entitlement to the American dream. We would like to write off up to 30% of the money you owe on your mortgage principle.

Now wait, if you got an upside-down pineapple cake loan from Countrywide, where you willfully decided (or maybe were “tricked”) to pay for only part of the interest you owed every month, then hold on. The best is waiting for you. We would like to wipe out any mortgage debt you owe that is over the current value of your house. But we also want to give you a 5% bonus as a head start to your new mortgage. So if you owe $400,000 on your house and your house is only worth $200,000. We would like to give you a new mortgage of $190,000. After all, you made a wise choice with Countrywide and no one can do what Countrywide can!

#housing

Comments 1 - 20 of 20        Search these comments

1   tradezmarket   2010 Mar 24, 9:06am  

Ok, I’m a little frustrated. After all the efforts to stabilize housing seem to have failed, it appears the next attempt will be the “principal forgiveness”. Bank of America is going to be the first to actively spearhead this policy. This I feel is the ultimate unfair practice.

So going forward, is there risk to purchasing real estate anymore? Why wait for prices to continue to go down rather than just buy TODAY? Why continue to rent from a landlord when I can be a home debtor?
If I am worried about job security, so what? If I lose my job or get my hours cut, so what? I can live in my house free of any obligations for months or even years without making a payment. Do you think you can do that with a rental? How soon do you think your landlord would be knocking down your door to get you out?
If I buy now and prices continue to go down, so what? Bank of America will reduce my principal loan balance.
If I can get a house with FHA financing and only 3.5% down and have the support of the US government on my side to keep me in my house I just don’t see the risk in buying a house anymore. So my credit may get a ding but that seems a small consequence for only having 3.5% skin in the game and the backing of our government’s agenda to keep me in my home.
It looks like renting is for fools at this point. Am I missing something here?

2   dont_getit   2010 Mar 24, 9:45am  

I couldnt agree more with the comments! I have been thinking the same really hard. It looks like the house values will not go down at any cost in the area I am looking at. The houses which are even priced at 2005 level are getting sold. I have been really wondering what am I missing? Now, I am waiting for my lease to get over. I will start to look in another 2 months, and buy it at the cost of american tax payer. Its not wise to be renting, when you can have free ride from anyone.

3   knewbetter   2010 Mar 24, 9:45am  

Whatever. I'm proud of the people walking away from their homes right now. I wish I had enough forsight to borrow as much as I could and then walk away, kinda the same way corporate America sucked the life out of so many good companies to feed their profits.

4   Austinhousingbubble   2010 Mar 24, 10:15am  

just because you can doesn't mean you should....just because you can, doesn't mean you should...just because you can doesn't mean you should...repeat...

...this can only end badly

5   MarkInSF   2010 Mar 24, 10:45am  

"...and the American tax-payers "

Where in the plan is there anything about taxpayers paying for it?

"So if you owe $400,000 on your house and your house is only worth $200,000. We would like to give you a new mortgage of $190,000."

If you're BAC, you've got these choices:

1) Foreclose, and get $170K after costs of foreclosure. $230L loss
2) Reduce principal, and take a $200K loss.

This is a no-brainer. They're just facing reality. And they lock people in for 5 years to get the reduction.

If I can get a house with FHA financing and only 3.5% down and have the support of the US government on my side to keep me in my house I just don’t see the risk in buying a house anymore. "

I don't see why that is such a good deal when rent is cheaper than the mortgage + HOA fees + taxes...

knewbetter says

I wish I had enough forsight to borrow as much as I could and then walk away, kinda the same way corporate America sucked the life out of so many good companies to feed their profits.

That does not seem like good foresight to me. If you bought that $400K house mentioned above with $20K down, and then walk, lose your $20K + whatever payments you made + your credit rating. How do you calculate that as a profit?

6   knewbetter   2010 Mar 24, 11:42am  

I know people who bought homes for 70k and borrowed up to 230k. I'm talking about borrowing hundreds of thousands of dollars and using the money to pay for student loans, credit cards, vehicle loans, contributions to children's college funds. I'm thinking big, not piddlely 20k.

Then, 5 years later you tell a sob story to a desperate company looking to make a loan..... I should've been more dishonest.

7   Austinhousingbubble   2010 Mar 24, 11:58am  

Have no fear, this forgiveness is taxpayer subsidized -- whether it be through TARP or the bargain basement bonanza at the Federal Reserve's Discount Window. Trust in the fact that nothing is ever written off.

Also, this means that local comps will not reflect the actual write-down price, so comps/house prices will stay high, as well as property taxes.

NEW RULES!

8   Austinhousingbubble   2010 Mar 24, 12:01pm  

I should’ve been more dishonest.

In case you hadn't noticed, amnesty and mercy are reserved almost exclusively for fuck-ups and takers. I guess virtue is its own reward, and life isn't fair, etc.

9   MarkInSF   2010 Mar 24, 12:13pm  

knewbetter says

I know people who bought homes for 70k and borrowed up to 230k. I’m talking about borrowing hundreds of thousands of dollars and using the money to pay for student loans, credit cards, vehicle loans, contributions to children’s college funds. I’m thinking big, not piddlely 20k.

Then, 5 years later you tell a sob story to a desperate company looking to make a loan….. I should’ve been more dishonest.

Ah, yes, that is a profit. I missed the part where anybody did anything dishonest though. Some people lucked out in the bubble. No doubt about it. Take note that those people could have sold their home for a $230K profit, the exact same profit they took in the cash out refinance (I assume).

10   Austinhousingbubble   2010 Mar 24, 2:20pm  

Theft by any other name...

It's dishonest on many levels. For one, it's dishonest in that it preserves the illusion of home values being higher than they are, as the listed sales price for that home will not reflect that forgiven balance but rather what it closed for during the bubble.

11   thomas.wong1986   2010 Mar 24, 2:54pm  

My same thoughts Ausitin. There were and are bogus sales prices during the bubble years. Not to be trusted. The process is badly badly broken. Its "institutionalized, goverment backed" Illusion!

12   dont_getit   2010 Mar 24, 3:07pm  

MarkInSF says

If you’re BAC, you’ve got these choices:

1) Foreclose, and get $170K after costs of foreclosure. $230L loss
2) Reduce principal, and take a $200K loss.

This is a no-brainer. They’re just facing reality. And they lock people in for 5 years to get the reduction.

They can do whatever they want, but they shouldnt be coming back begging for bailout. Period.

13   MarkInSF   2010 Mar 24, 3:47pm  

Austinhousingbubble says

Theft by any other name…
It’s dishonest on many levels. For one, it’s dishonest in that it preserves the illusion of home values being higher than they are, as the listed sales price for that home will not reflect that forgiven balance but rather what it closed for during the bubble.

You said it yourself I think in another thread. The onus is on the buyer to do their research. For you and me, it's good to know that "comps" do not include properties where there was a reassessment and principal reduction.

14   Austinhousingbubble   2010 Mar 24, 5:27pm  

For you and me, it’s good to know that “comps” do not include properties where there was a reassessment and principal reduction.

I haven't read that anywhere. Besides, my argument is that the comps *should* include these properties in their averages, but at the newly assessed value. Otherwise it's a distortion of the data available to any potential buyer doing his due diligence.

15   MarkInSF   2010 Mar 24, 6:19pm  

Austinhousingbubble says

For you and me, it’s good to know that “comps” do not include properties where there was a reassessment and principal reduction.

I haven’t read that anywhere. Besides, my argument is that the comps *should* include these properties in their averages, but at the newly assessed value. Otherwise it’s a distortion of the data available to any potential buyer doing his due diligence.

Well, maybe is should, but absence of disclosure is not dishonesty, unless it's expected because of legal requirements or a deliberately false statement. When I negotiate a salary in a new job, it would be nice if I knew what everybody else was getting paid, but I'm not going to accuse my perspective employer or the other employees of dishonesty for failing to disclose what arrangements they've made.

16   Austinhousingbubble   2010 Mar 24, 6:47pm  

It distorts the true market value, Mark -- kind of like if a seller bids on his own stuff on Ebay; the end price is not a true reflection of the market for that item, but of a manipulated market. This is dishonest in my estimation.

But let's use your analogy -- salary disclosure: this tacit understanding among employees in the workplace is an unethical practice at best, specifically the Damocles sword hanging over any employee who dares broach the matter with fellow employees. Employees *should* openly share their compensations with one another. It's useful data in negotiating compensation. Willfully obscuring this information lands you somewhere closer to the dishonesty end of the spectrum in my book.

17   pkennedy   2010 Mar 25, 5:15am  

I'm betting the bank will get a lot more out of this deal than the home owners. If the loan was 400K and it's valued at 200K and they'll get 170K after they foreclose, and resell (which I'm doubting they would even get.)

-6 months of missed payments, before they foreclose and get that person out of there
-Legal costs
-Holding costs
-Reselling costs
-Taxes

I'm betting they will use inflated home values. That 400K home has only dropped to 250K, and the person will get a loan modification to that level. That will put them under water, but not so much that they're a risk of walking away. They will be paying the absolute maximum for this house that the bank can get from them.

Instead of 170K or less, they're getting 250K. They're probably dropping that whole "non recourse" thing as well, forcing people into a much more difficult situation.

BOA also bought out countrywides loans for a fraction of their true costs, so BOA isn't really losing anything. They're taking the worst mortgages and trying to make them work. These were loans that they probably considered to be worthless when putting in a bid for countrywide. So in fact, they're going to walk away with a whole bunch of money.

Those home owners are still screwed. They might have gotten off the hook by 150K, but they're going to pay 70K more than "we" here will be paying the banks for the properties that were foreclosed on. Some people will have walked away with lots of equity loans, but the majority are probably not holding onto anything useful. We didn't pay outrageous amounts of money monthly for years. When we buy here, we're going to buy for far less than these people did, and we'll have a decent down payment. Those people are still going to be living in poor conditions, paying for far longer than we will.

This isn't "they got everything! I got nothing" they're getting screwed as well, and they have been paying for it, and will continue to pay for it.

There are some that cashed out their equity completely, spent it, and made out like bandits if they walked away already
There are some that sold before the bust and made out like bandits
The majority of the people who will get "help" here got screwed, and the bank is just finding better ways to keep screwing them.

People who walked away scott free are the ones who really hurt the tax payer. These might have hurt the taxpayer a bit, but in general they've hurt themselves far more, and now that we can buy those houses for 200K, we're going to do much better than them.

18   PaulLegge   2010 Mar 25, 5:25am  

pkennedy says

I’m betting the bank will get a lot more out of this deal than the home owners. If the loan was 400K and it’s valued at 200K and they’ll get 170K after they foreclose, and resell (which I’m doubting they would even get.)
-6 months of missed payments, before they foreclose and get that person out of there

-Legal costs

-Holding costs

-Reselling costs

-Taxes
I’m betting they will use inflated home values. That 400K home has only dropped to 250K, and the person will get a loan modification to that level. That will put them under water, but not so much that they’re a risk of walking away. They will be paying the absolute maximum for this house that the bank can get from them.
Instead of 170K or less, they’re getting 250K. They’re probably dropping that whole “non recourse” thing as well, forcing people into a much more difficult situation.
BOA also bought out countrywides loans for a fraction of their true costs, so BOA isn’t really losing anything. They’re taking the worst mortgages and trying to make them work. These were loans that they probably considered to be worthless when putting in a bid for countrywide. So in fact, they’re going to walk away with a whole bunch of money.
Those home owners are still screwed. They might have gotten off the hook by 150K, but they’re going to pay 70K more than “we” here will be paying the banks for the properties that were foreclosed on. Some people will have walked away with lots of equity loans, but the majority are probably not holding onto anything useful. We didn’t pay outrageous amounts of money monthly for years. When we buy here, we’re going to buy for far less than these people did, and we’ll have a decent down payment. Those people are still going to be living in poor conditions, paying for far longer than we will.
This isn’t “they got everything! I got nothing” they’re getting screwed as well, and they have been paying for it, and will continue to pay for it.
There are some that cashed out their equity completely, spent it, and made out like bandits if they walked away already

There are some that sold before the bust and made out like bandits

The majority of the people who will get “help” here got screwed, and the bank is just finding better ways to keep screwing them.
People who walked away scott free are the ones who really hurt the tax payer. These might have hurt the taxpayer a bit, but in general they’ve hurt themselves far more, and now that we can buy those houses for 200K, we’re going to do much better than them.

You make some really good points here. The bank will almost certainly value the house too high and will end up profiting more because of the higher price. This has the potential to be a very devilish deal, especially if Uncle Sam has his hand out for tax off the debt forgiverence. The entire thing just stinks...

19   MarkInSF   2010 Mar 25, 7:26am  

"The majority of the people who will get “help” here got screwed, and the bank is just finding better ways to keep screwing them."

Yep. Even the government programs to "keep people in their homes" are really not in the best interests of home debtors. What they really mean is "keep debtors paying".

The government is trying to protect depositors, and the financial system on the backs of home debtors. Better them than me, the tax payer, I say. If the government were truly on the side of underwater home debtors though, they'd be telling them to deed over their house to their lender and go rent.

20   MarkInSF   2010 Mar 25, 7:28am  

Austinhousingbubble says

It distorts the true market value, Mark — kind of like if a seller bids on his own stuff on Ebay; the end price is not a true reflection of the market for that item, but of a manipulated market. This is dishonest in my estimation.

Yeah, I'm all for more transparency in real estate, and FIRE as a whole. Much of the real estate industry is based on information asymmetry, and is not value adding - just wealth transferring.

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