I thought I would share some commentary from Diana Olick of CNBC in regards to her listening to a hearing of the House Financial Services Committee this morning.
She said they were talking about “mortgage issues and then said (I know, I’ve really got to get out more).” Yes, we all do, but the facts are that this is fascinating and by far the biggest “issue” that our country is facing right now. You can’t keep your eyes off what lender has went belly up, what CEO has been given the axe and how much Countrywide stock is down today.
Listening or watching government testimony is part of the “reporting” or “blogging” part of my job. I didn’t catch the hearing this morning, but the last few hearings that I have witnessed, were by far the best television I have watched in years. Nothing gets me happier (well almost) then seeing our nations Senators tear into Ben Bernake about our “mortgage issues” and housing crisis, live on TV!
Unfortunately, for Diana Olick, today was not as entertaining as she’d like it. However, I thought I’d share some comments with you that she had made in regards to NACA (The Neighborhood Assistance Corporation of America) and Countrywide’s new relationship.
The next panel included two strange bedfellows: Countrywide Financial [CFC 9.42 
-0.86 (-8.37%) 
]
and NACA, or the Neighborhood Assistance Corporation of America. NACA had been a huge critic of Countrywide, boycotting its local offices and pretty much blaming it for the fall of the housing market.
Anyway, the two are now working together to modify troubled loans in a unique agreement that, in my mind, is fascinating. Bruce Marks, NACA’s chief, told me yesterday that when the Countrywide official asked for a meeting with him to discuss this, he didn’t believe anything like this would ever happen.
I wanted the lawmakers to get a better understanding of this agreement, of the unique circumstances that actually have the investors in these loans willing to forego contracts and modify the products they purchased.
And the fact that Countrywide is willing to spend all this time and manpower modifying the loans, for which they get no additional servicing fee…well the whole thing, to me at least, is an unbelievable example of just how bad all these loans are.
The largest lender and its greatest enemy, sitting side by side, as the lender basically admits that the loans it sold are in deeper trouble than we thought, not to mention the act of modifying them in such a way, is a tacit admission that the loans were bad to begin with. Unfortunately, barely three or four lawmakers actually made it to the hearing. Need I say more?
{ 14 comments… read them below or add one }
Politicians may have the best intents, but they do not understand the mortgage securitization business. Consider this:
Many of the defaulted mortgage loans of subprime borrowers can not be salvaged. Why? Here are a few reasons:
1. The loan itself is upside down
2. The borrower has no skin in the game and simply walks away
3. Contactual constraints prevent the loan from being recast
I think Paulson understands the mortgage securtization business very well, since he does come form Wall Street and he has surrounded himself with the major players that know this better than any blogger or reporter.
They actually know more than they tell us and if they are worried and they say that loan modifications are the only way, well, I would listen.
I agree, many mortgages and homeowners will not be saved and they will be part of the collateral damage.
Good Luck to HIM! He needs to think about Plan B, OR F for Fraud, IE Predatory Lending and Predatory Mortgage Servicing.
I personally did loan modifications for Aegis Mortgage Corp. prior to filing for BK. I myself took into consideration location of borrower, type of income and earning potential. Borrowers were thankful for the modification and could afford what we gave them, most times it was at or below their start rate.We tried to right a few wrongs done at origination. I think if a modification would work than why not do it. I pumped out over 200 loan modifications per month in our department. There are some mortgage companies already doing workouts, but more should join in.
I truly do not think that anyone understands about predatory servicing and what these servicers are doing to borrowers.
I know you at MSfraud have covered this extensively and would love to maybe collaborate on some future posts about this very issue.
Thats great news. I would love to hear from you via email and maybe you can post some helpful advice to readers on the blog in regards to loan modification and loan workouts.
I’ve decided rather than play phone tag to have my loan modification done in person, at Countrywide’s Financial Center. I am scheduled to go there on Friday and speak to the Loss Mitigation Department so that they can get my financial information.
Today, the manager of the department told me she’d call and give me the number to Jerry Durham, who heads the Home Retention Program. When I didn’t hear from her by noon (about four hours later), I took a walk — fifteen minutes, and I was at her office.
She smiled, but I don’t think it reached her eyes. I want her to know if she doesn’t call me back I WILL be at her office and can be there in minutes.
She called the Loss Mitigation Department for me right then and there in her office and has committed to fax all the documents that need to be sent for me. She’s also offered to look over my loan documents for me. The manager of the office seems sincere but I am jaded.
The loss mitigation department lady told me that they called in the morning and spoke to a Mister — I cut her off and told them there WAS NO MISTER. I told her I have zero interest in playing phone tag with anyone and would be doing all of the paper work in office at the center. Hopefully this will turn out to be a smart decision. I’m keeping my fingers crossed for myself and for all of us struggling to end this nightmare. Anyone have any suggestions as to exactly what financial information I should bring with me to the meeting on Friday. I own a S Corporation, so I don’t have my 1099s for 2007 yet — only what’s been deposited in my business accounts can be shown by way of bank statements.
I also have two tenants, so I can show the income from the rental units but other than that, I have no pay stubs or anything like that.
JacMac….CW will ask you for everything under the sun. If it shows income, then take it. Tax returns, bank statements (last 3 mo), hardship letter (and make sure it is lengthy and very descriptive). Make sure your loan number is at the top of all the documents!!! If you don’t get anywhere, post again and I will get you names and numbers of heads of that department and/or email addresses because they shut down all voicemail systems. Good Luck my fellow CW friend.
Thanks so much!!! I want to go in with guns blazing!
The real problem here is Greed and nothing more. Wallstreet sure liked the money and created the bad products to fuel the sin. CW is just like the rest – Wallstreets’ Scapegoat.
Countrywide wants to modify the junk loans because to not do so would result in immediate defaults. It benefits CW to bleed the buyers as much as possible for as long as possible, but it does not benefit the buyers who eventually have to give up an overpriced house they ultimately cannot afford.
CW will end up with these houses sooner or later.
4. The loan was to a speculator or flipper with no real assets or income
5. The loan was planned to be paid for with the “cash out”, which ran out
6. Borrowers are behind on property tax payments too
7. Some borrowers can’t even make the payments on the teaser rate! MANY of these defaults are occuring before the loan resets!
I am concerned that this is not going to solve the problem. The problem is 1)Too much housing inventory 2)Tightened credit condition and 3)Reseting/Foreclosures…
Although he is proposing a situation to help # 2 and #3 I think this idea is to HOPE that problem #1 starts to slow down and recede..I have a feeling that the Fed is trying to buy time..5 to 7 years with the HOPE that inventory goes down and prices stabilize…What scare me is what happens if doesn’t work that way? And is the Fed telling us in their own way that the housing bottom and return to normalization is 5 to 7 years away??…
So far all the things the Fed has tried to get us out of this issue,(lower discount rate, lower fed rate, tell lenders to work with borrowers…)NONE have worked or kept us away from talking about a recession…as a matter of fact the recession talk has become a growing concern since Fall..
I was told to modify my loan would take me $4,000.00 for Bank America to do this . I request this Tom Clark to put this in writing but he refused.He wanted me to take out a loan with Fannie Mae to do this and pay Bank America $4,000.. I will lose all my equfity in my home. I was told to pay two house payments which I did and now they refused.