Countrywide Home Loans has cut a new deal with and organization that used to be a formidable foe, the Association of Community Organizations for Reform Now, or ACORN. Apparanetly this new agreement, states that Countrywide will work with struggling h0homeowners and to try to manage payment plans for borrowers that are already behind in payments, regardless of which type of home loan they have.
Full details of the initiative will be disclosed later today. Initial plans to disclose the deal were postponed last month after Calabasas-based Countrywide agreed to be acquired by Bank of America Corp. for $4.1 billion in stock.
Associated Press:
Through this partnership, Countrywide and ACORN have agreed to a set of home retention standards to help borrowers who are in various situations of financial difficulty to establish suitable repayment plans or other solutions,” Steve Bailey, Countrywide’s senior managing director of loan administration, said in a prepared statement.
Some 6.96 percent of the 9 million loans in Countrywide’s servicing portfolio were delinquent as of Dec. 31, up from 5.02 percent in December 2006.
About 1.04 percent of the mortgage loans, or 93,961, were pending foreclosure, up from 0.65 percent.
Under the latest plan, borrowers with subprime hybrid adjustable-rate mortgages, which typically were issued with a low “teaser” interest rate and then adjust higher after two or three years, could be offered the option of refinancing into a lower prime rate loan, or have their initial interest rate frozen for five years.
Homeowners with fixed-rate subprime loans who have fallen behind on payments could be offered short-term repayment plans, loan modifications or other adjustments, including having their interest rate frozen or adding their overdue balances to their principal loan amount.
I feel compelled to balance my sympathy with suspicion that this person, or at least many others in similar circumstances, are benefitting from a better deal because they, like the banks, made bad decisions. Before castigating Countrywide for not treating you like royalty when you call to renege on a contract (and cost them money), perhaps you can tell readers of this blog why you now require a loan modification. Did you not read your original mortgage contract carefully? If you conducted business in this way, how are you much different than Countrywide?
In the end, taxpayers will buy everyone a house and pay every banker their cash bonus, while those of us who waited and saved to buy a home face inflation, higher mortgage payments, and more exacting lending conditions. I will try and feel your pain at the hardship of dealing with a company that is probably going to go bankrupt for its errors, as I pay much more than you for the privilege of borrowing money from one of the remaining solvent lenders who survive borrowers who fail to honor their lending agreements. I will seek to understand your hardship as I pay higher taxes to bail out the GSEs that buy your worthless paper and patch up your neighbors windows to make your neighborhood nicer. I will attempt empathy as I apply to lenders who now look askance at people with even good credit. I am not sure I will succeed.
I know this may not be the place to do it, but I’m going to throw in a little compassion for the lenders’ staff. Business as usual was you make loans, a few of them go bad and the house gets foreclosured. That’s what they were used to.
Now it’s a whole new ball game. Many, many, many loans are going bad. Loan modifications are the new game, but few people in the company have experience or authority to do them. Some of the borrowers calling you are clear and concise, others are panicky and incoherent. Some of the borrowers calling you have no hope of saving their house, others do. You’ve tried telling the lost causes that they won’t be getting a loan mod but they won’t accept that, so you just find ways of ducking them. After all, it’s not like you’ve all sorts of spare time on your hands with the massive number of phone calls coming in. You can’t get a straight answer from your supervisor, as they seem as frazzled as you feel. There has been a massive wave of layoffs in other departments at the bank, and once the current crisis ends you suspect your department will get hit next.
Maybe these organizations aren’t performing as well as they should, but maybe they have a reason. And maybe that person on the other end of the phone is losing their house as well.
I have been helping a lot of people get through these Loan Modifications. All of the clients I have helped have really been trying to keep their homes and are just having a really hard time financially. It is their dream to have a home and yes most of them did understand the terms of the original loan but there are life changes that catch up to people in the worst times. All of those I helped had jobs that have been severly affected by this mortgage downfall. I do undertand all of your comments on both sides but for a bank loosing is not the same as for a family. It is very depressing for many families that never had to go to a food bank before and now they are having to do just that. Not one of those people I helped has left their house to be foreclosed on. All of them have modified their loan terms to be fixed for 3 to 5 years which has given them hope again. There are alot of people that had 720 fico scores that were getting the worst rates possible. I had to really go through all the loan docs to realized what these loan originaters did. I am not blaming all of them, just he ones who ran off with thousands of dollars and left people with huge rates. But here is a reality check EVERYONE is affected by this crisis… one way or another we all end up paying for it. But I think Brandy is making a really good point the process if loan modification is really set up for you to give up. They are supposed to make it hard for you to get this done. I will tell you that Countrywide is extremely hard to get things done with. After making all these calls for 36 families… in 2007, I made a firend or two at Countrywide and they are told to do these very annoying things to people. The quickest have been through Option One .. 3 weeks. Countrywide 4 months. EMC 5 to 6 months and still waiting.
Hey Rational Expectations -
I understand you played by the book. In fact, I even respect that. You may have an income, a savings plan, and a credit score that allowed you to get a decent mortgage. Maybe with a slightly higher interest rate, but with a reputable lender, with a good down payment you’d been preparing for, and all the goodies of the American dream all rolled in to one.
Well, how about the rest of America? Those who were looking for a place to support their families that didn’t involve a 2 bedroom apartment for a family of 4 (or more)? How about those who went looking for a good place to live in and invest in, being told that we’re “getting the best deal out there”, and you’re “just throwing money away when you rent”? If its the consumer’s responsibility, then how can anyone with an income (and even some without, unbelievably enough) could land a 350k mortgage, with facts that were never fully revealed (no docs loans anybody?). Or, like others, maybe they were told “its not the greatest mortgage right now, but if you get your credit scores up, 6 months to a year from now, you can refinance, and we can lower your payments by a few hundred – but this at least gets you in the house.”
Except then the industry tanked. I, personally, found myself applying to 5 or 6 lenders to refinance, based on my mortgage brokers initial advice. Each time, about 3 days from closing, we’d discover that the lender was closing its doors. Overnight, our financial plan was turned upside down. And the best part is, with prepayment penalties, the average American can now /lose/ money, just for selling their house at its original value! Yes, I can pay my mortgage company just for the privilege of avoiding bankruptcy. Isn’t that wonderful?
How about those of us who were never told that we were signing up for an ARM, but recently got letters saying “expect your mortgage payments to jump up by $700″? All of this, and I never even dealt with Countrywide, who are notorious for their backhanding schemes.
I have no sympathy for Countrywide. When their president puts forth one of the biggest marketing campaigns in the industry, including fliers, mailers, tv commercials, radio ads, and outbound calls at dinnertime of brokers saying “I just want to get you the best deal possible”, then dumps half of his stock for untold millions after the industry goes south, but THEN says “remember, our clients came to us, we didn’t seek them out” (Businessweek, Sept 2007, paraphrase) … I don’t have any sympathy. When rumors circulate about software designed to intentionally ignore borrowers savings accounts and down payments, so that interest rates stay up, I don’t have any sympathy. This “service” they so altruistically provided, lined their pockets pretty well, in interest-only loans, closing fees, prepayment penalties, you name it.
The average consumer has been taken for a ride, by creditors, lenders, and financiers alike. And if the average consumer can get a bit back by making Countrywide and others renegotiate their loans, drop some payments, and get a bit of their life back, I say more power to us. And if it means Countrywide’s stock goes down a bit, and the Fed steps in to help stop half of America from being foreclosed on, I (personally) think it’s about bloody time.
But you can hold your head up high, right? You probably make your payments on time, your credit scores are pretty good, so you *must* be a better consumer.
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Handy Saputra
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Does the purchase of countrywide by Bank of America have any effect on this, positive or negative?
Its pretty bad but comforting to see that other people are experiencing the same thing. We have also had financial problems and are working through a loan modification. I have made the calls and listened to the csr’s and your right they haven’t a clue. oh and you got cut off “accidentally” and then force to listen to that horrible countrywide “HOLD” music and then have to go through the acct # then bla bla bla… They DO lie my Negotiator notated that he talked to me but he hasn’t. In fact I have placed several emergency calls to him and he has Never returned my call within the 24 period that they stated. Just dont give up because there are people who are destroying their homes and just walking away leaving them for the lenders to deal with. Its Your house and its worth saving. Mine is anyways I love it and I have worked hard for it. Good luck in your seemingly impossible task and know I am in it with you and have been since Christmas. I still have not gotten it settled and we are going on several months all the while more fees and interest are accruing…… Yea Im so glad I chose Countrywide Thats sarcasm if you didn’t catch that