Posted on 08/24/2007 6:41:18 AM PDT by Hydroshock
NEW YORK (CNNMoney.com) -- Countrywide Financial, the nation's biggest home lender and one of those most affected by the subprime mortgage crisis, found itself the target of stinging criticism Thursday from an organization trying to help homeowners in peril.
The Neighborhood Assistance Corporation of America said Countrywide (Charts, Fortune 500) was not doing enough to help people who took out subprime adjustable-rate mortgages (ARMs) over the past few years and now may lose their homes. Subprime loans are issued to borrowers with poor credit histories who often lack the funds to make large down payments.
Justin Urquhart Stewart of Seven Investment Management joins CNN to talk about mortgages and the markets. Play video
Millions of homeowners are considered at risk of foreclosure as adjustable-rate mortgages reset at higher interest rates over the next year or so. NACA has committed $1 billion to helping some of those borrowers by refinancing their mortgages, but says it can't meet its goals unless lenders like Countrywide cooperate.
Countrywide CEO: Outlook grim NACA CEO Bruce Marks called on Countrywide to take more active steps to provide its borrowers with terms they can meet to help them keep their homes, something Countrywide said it is already doing
(Excerpt) Read more at money.cnn.com ...
Bruce Marks is a socialist whose group has been shaking down major lenders for “partnership” contributions for years. I suspect Countrywide has cut off the money for his organization so now he is going after it. Countrywide may be having its problems, but being an irresponsible or predatory lender is not one of them.
The vultures will happily quote anyone willing to feed the Big Panic on real estate.
What exactly is Country wide expected to do? Not ask people to make their payments? Crazy.
I really find it hard to have any sympathy for people who don’t read the fine print. These homeowners should have done their homework.
Yawn.
Or for mortgage companies that lent more money that the house was worth to people that couldn't afford the payments.
Homeowners in peril have their own problems. They have chosen, however unwisely, to put their future earning capabilities and monetary security at risk. They have a legally enforceable contract, which they signed of their own free will (albeit subject to some selective blindness), which binds them to repay a given sum of money according to an agreed set of terms. The biggest problem, is variations in the rate of the interest on the unpaid balance. They signed on perhaps an “interest only” or “below market rate” interest bearing loan, and did not realize what “amortization” really means. The effect is, that on any amortized loan, the initial payment is mostly payment on interest, with only a very small amount going to reduce the principal of the original loan. So even after a year, or two or three, most of the original debt still exists.
There is a way to beat this. Determine how much the principal is being reduced each month, then pay two or three times that much in addition to the agreed monthly payment. This one act alone can reduce the loan repayment by literally years.
And do not fret about the lender going “broke”, as the obligation is often no longer held by the original lender anyway, though they may be acting as the servicing agent. And even if they still hold the paper, all these insturments are passed to the hands of a court-appointed receiver, as “successors and assigns”.
If you fail to pay regard (and the agreed monthly payment), the “successors and assigns” are in a well-established position to pursue you for the remaining debt, unless satisfactorily discharged in some manner.
And the Realtors have been only too happy to accept 6% of all those deals...they are the ones who kept prices rising....yet the lenders are blamed as the predators for finding new ways to help people afford these astronomically high home prices.
This is a lot like those folks that bought Enron stock for $5/share and watched it climb to $100 and they scream that they had been “cheated” out of $95 when it fell back to its true value.
I have often said this train wreck was caused by greed adn stupidity on all involved.
I read the other day that half the people who got no-doc loans had inflated their annual income by more than 50%.
Isn’t it a federal offense to lie on a mortgage application?
Lloyd Dangle is a radical leftist. Is he your economics mentor? Why are you spamming his cartoon propaganda all over Free Republic?
1) Alan Greenspan urges Americans to take out ARMs for a "better deal".
2) Bush signs the "Bankruptcy Reform" Act, which includes numerous provisions making it harder for consumers to obtain protection from foreclosure--including killing the medical exemption (those who went broke solely from healthcare bills and not from buying plasma TVs) which was in the bill before March 2004
NACA is a socialist organization that uses guerilla tactics to “negotiate” ridiculously good terms for unworthy people. They then ask these “clients” to go on the offensive against ALL mortgage brokers and banks as well. Basically a breeding ground for left-wing “corporations are evil” activists.
Bingo. HGTV had a show for awhile about first time home buyers. We were throwing things at the teevee as some of these people who could barely pay their RENT got in debt to their eyeballs to buy a house that in most cases was bigger than what they needed—and cost lots more than what they could afford. They would get what they called “creative” mortgages so they could have a fairly luxurious place to live—and who knows how long before the foreclosure?
What’s with some of these people? There is nothing wrong with renting and saving until you can come up with a decent down payment, then buying something within your means—and moving up as circumstances permit. You don’t have to start at the top—you can start lower and move to the top.
OF course if one can barely afford the payment as it is...then this is impossible.
I don’t agree with them, but I thought it was interesting to hear the calls for this. And I think we will hear more of it.
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