Cold calculations: Countrywide's exit strategy leaves subprime borrowers in the lurch

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FAIR TAX ACT BABY!!!!!!!

MIKE Huckabee the only one to vote for.
BYE BYE IRS!!!!
K.I.S.S

I've watched the home market

I've watched the home market on the way up and down. I have had friends, of modest income, who have speculated heavily, even forming investment groups. When the market was up, every person with $5k for a down payment looked like a genius. I had a friend who drove by a house in Reno and simply bought a house on a dare. A fixed interest only loan, converting to a variable loan in 3 years. He did the same thing in Phoenix. I think he "owned" three houses at last count. He went to Phoenix with his family, stayed at a posh hotel, visiting "his" property, all written off in taxes. He and others are modest income people, speculating in the house market, like Donald Trump on a beer budget. I have an MBA, and wondered what the underlying economics were, seemed to be greed coupled with cheap loans, greed again. Now, the market is down, I heard the wailing, "How was I fooled by the unscrupulous banks?" Please, the market has to adjust, and shakeout the speculators, that will take at least 1-2 years. Yes, my "friends" will have to suffer, too bad. Of course, as every house speculator knows, the Fed will bail them out, the government cannot let homebuyers collapse, so the theory goes! After all, they are the basis of the economy? Right? I am on a fixed income, as many people are. I have had to suffer the Fed cuts while I am subsidizing their gluttony. Sorry, no tears will be shed by me. My friends? Well I haven't talked to them for awhile and frankly, I don't miss the tales of El Dorado!!

I am the unfortunate

I am the unfortunate borrower who lost not only one, but almost a second home in the subprime loan market.

Let me put a human face on this. I consider myself a relatively intelligent person, albeit niave to mortgage lending. I read information before I made the decision at 26 to take my savings and become a first time homebuyer. I prepared my credit, and consulted those I felt were knowledgable.

I went to Countrywide, who could not qualify me to buy virtually any property in my income area. I'd need an additional $20 -50K to qualify for anything.

I was wary of the stated income loan that my broker showed me, however, I knew that my earning potential would increase over the life of the loan, and I'd planned on refinancing. True to form, I moved up in my career track and within six months increased my income by a third. I got another job and my income doubled from what it was at 26. But by that time, it was too little, too late.

You see, I was counting on the ability to refinance. By the time the rates adjusted and I started looking to refinance, boom-- I had a major financial emergency that wiped out my savings and put me behind. I treaded water for nearly six months, while my credit deteriorated, making it even more unlikely for the skittish lenders to touch any loan for me. I skipped meals, and basic items just to live.

Finally I moved into a family member's rental property (who also had a subprime loan) and tried to put my house on the market.

I lost it three months ago.

If I knew then what I knew now, I would have waited to buy a home; I would've ignored the skyrocketing mortgage values that told me if I wanted to stay in the Bay area regardless of if I married or not I needed something under my belt. When you know better you do better.

God is good. Although my rental income property that I rent with a sister almost went the way of the first property, we were able to come up with some emergency funds to stall the process and give us enough time to keep from being homeless.

I take responisbility for my ignorance, and naviety. I often feel that nobody cares about what happens to those of us who entered these loans. While New Century gets a bailout, my credit is ruined; I'll have to rebuild.

I remember the many phone calls where I begged them to accept partial payments, or extend the loan life, or tack on interest to extend the life of the loan. One creative solution could have been such a help.

Robert, you are a tool. Go

Robert, you are a tool. Go get an education in economics instead of creative writing.

One thing you don't seem to

One thing you don't seem to appreciate - when Countrywide was in the subprime business - they sold their loans to investors through CDOs - collateralized debt obligations - mostly sold to gullible foreign investors, hedge funds and pension funds. Quasi fraud, and Countrywide wasn't the only mortgage lender to do that. The market for CDOs (Google the word CDO) has collapsed. The foreign investors aren't buying. Countrywide has been CUT OFF. Them closing their subprime business wasn't just a whim. They were FORCED to do it. Your real problem is with the crappy nature of CDOs that had been rated AAA by bond rating agencies. When you actually look into what the CDO contains - a lot of crappy subprime mortgages high default rates. Nobody, and I mean nobody, wants to touch CDOs now because the increasing default rates on subprime loans that make up CDOs mean that as investment instruments it's impossible to determine their value. Hedge funds, foreign investors and pension fund managers didn't count on this. They thought they were getting AAA rated investments - roughly equivalent risk to US government guaranteed investments such as savings bonds, treasury bills or FDIC guaranteed deposits. They thought these CDOs were equivalent risk and would pay out. Since that widespread assumption has proven false, the CDO market has collapsed. NOBODY wants to buy CDOs. Those investments aren't worth what was paid for them. Investors have taken major hits and their losses have to be explained to their pensioners, investors, THEIR LENDERS & guarantors. To make a long story short, the financial markets ultimately dictate who can get their mortgage funded and who cannot - and subprime borrowers have been cut off. En masse. Get used to it. This isn't Countrywide's choice, as they would have you believe... The jig is up.

If these sub-prime borrowers

If these sub-prime borrowers think they have a case, they should sue the party that wronged them. Otherwise leave me and my wallet out of it. Countrywide has stopped writing these risky loans because the cat is already out of the bag and everyone else now knows they're crap so they can't sell them off to un-witting investors to get more cash to do it again.

And Countrywide doesn't care if the loan goes into forclosure as long as it happens after the period of right of redemption whereby the purchaser of the debt can force the originator (Countrywide) to take it back.

And the foreclosure doesn't hurt the surrounding area, it mearly restores the prices back to where they would have been before these sub-prime fools bid them up.

Here is a trick. Pay your

Here is a trick. Pay your damned mortgage and other bills on time, and there would have been a 99% chance you would have been able to refinance out of that "teaser" rate. The one tide bit articles like this fail to mention, is that the majority these deadbeats could not even pay the "teaser" rate payment on time, which is why they could not refinance out of the loan to begin with, and therefore got stuck in the upward adjusting rate. These articles also fail to mention that the very same people who like to blame the mortgage company, are the same people who whined and cried when these types of borrowers could not get the financing for home ownership. Well, those people did get the financing, and they didn't pay their bills. The people who were financially responsible during the "teaser period", which believe or not, were the majority of "subprime" borrowers, were able to get out of that type of loan and into a "prime" fixed rate loan. So because of the self employed guitar instructor who felt the desire to buy $350k home, and the wannabe real estate investor who bought up a bunch of homes using owner occupied financing at 100% stated income thinking they could flip the home, decent people who are either self employed or fell on hard times are SOL. Yes, Countrywide gambled and perhaps lost, but if there are no investors for subprime loans due to a bunch of deadbeats and a few brokers, lenders, etc, they are wise not to offer them. Maybe the author of this article would like to invest in a bunch of loans that are not paid on time??? It would be foolish to re-inflate the bubble that is causing these problems to begin with, and that is exactly what would happen by giving these same people new loans. This is the correction needed to weed out the people who do not have the means and/or financial acumen to own a home, so only the people who do have the means and financial acumen have and can get get financing they deserve for home ownership. That will lead to new investment into the mortgage backed securities, even perhaps subprime, because the majority of people who default will no longer own a home. It is perhaps understandable and certainly easy to blame the big evil mortgage company, but it is the collective financial dimwits and donald trump wannabe's who are mostly to blame.

So many lies by Countrywide.

So many lies by Countrywide. When Countrywide said that it doesn't, or didn't offer higher commission for sub-prime loans they were a bit off. Yes, in fact in the retail division we used to make much more on sub-prime. I do not know about the Wholesale/Broker end, but we did. My office is crumbling. It's very disturbing. More revenue equals more BPS, plain and simple.

Come on people. Blame who?

Come on people. Blame who? The person who thought that the price of houses would go up every year for the next 100 year...

Buying a home, buy and learn how to use a calculator first....