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Countrywide Question


JustaTexan
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Hey guys I bought my first home this year in March and have been keeping up with all the bad news about the housing market and Countrywide.

Does anybody actually know how it would affect us little people if Countrywide actually did go bankrupt? I mean how does that work exactly? I've been hearing all kinds of news about them raising rates on people. They can't raise my rate if mine is fixed at 6.75 right? I have an FHA countrywide loan.

I just get worried hearing all this financial mess.........

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Don't sweat it. They likely won't go under. But even if they do, a new service provider would step in and service your note. You may just have to send your payments elsewhere. Your loan is fixed by contract, so they cannot change it. The same thing would happen as if you had called them and informed them that you are only paying 5.00% for now on. They'd say, "see you in court".

You should know that somewhere in your agreemnt there is probably a provision that makes your note callable by the lender should they decide to exercise that option (ie: payment is due in full in a fixed period of days). But banks and investors will not be calling back loans short of armegeddon. If that starts happening, liquidate all assets immediately, buy gold & food, and head to your local bomb shelter.

Also, your loan is backed by FHA, so that is another level of safety.

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Hey guys I bought my first home this year in March and have been keeping up with all the bad news about the housing market and Countrywide.

Does anybody actually know how it would affect us little people if Countrywide actually did go bankrupt? I mean how does that work exactly? I've been hearing all kinds of news about them raising rates on people. They can't raise my rate if mine is fixed at 6.75 right? I have an FHA countrywide loan.

I just get worried hearing all this financial mess.........

I have heard recent loans that were done through ABC (American Broker Condit), because they shut down and filed for bankruptcy. Their bank accounts are frozen. People's escrows are not being paid out of these accounts, and the problem is growing bigger every day.

If the taxes are not paid, there could be liens placed on the propertys, And insurances policys could be cancelled for lack of payment.

There could be an issue with your bank - of them trying to sell your loan to another lender. When loans get sold to investors, investors are looking make a max return. Countrywide is know for low rates and rolling the closing costs into the loan. If countrywide cannot sell their loans to investors, they could become top heavy and run into problems later.

Not trying to scare you, more then lightly you will be ok. I deal with this type of issues day in day out. I used to work with countrywide for four years.

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Your loan is owned and backed by FHA, regardless of who services the mortgage. loan servicing is incredibly profitable. Should Countrywide roll over, I would suspect Wells Fargo to take over the servicing of your loan. Wells Fargo took over the portfolio from Washington Mutual almost a year ago.

Funny, but four months prior to that happening Washington Mutual sent out a letter to me stating that I would need to provide proof of REPLACEMENT COST insurance on my home, or they would obtain the insurance for me (force placed insurance). I called them, notified each layer that I was also recording the conversation, and asked what this notice was all about, and told them I have reviewed my mortgage documents, and nowhere was there anything that stated I needed full replacement coverage (I do have this policy, however), and I am fully aware of their attempt to gain from the acquired equity from my home. After the third layer of telling people in the company that they are wrong, I finally reached someone who tried to dismiss this as a blanket letter going out to all holders of mortgages, which really fueled my fire.

My reply was to thank her, and also to let her know that I would be forwarding all recordings and documentation to the Federal Trade Commission and to the Federal Housing Administration. It was my surprise that things unfolded the way they did. But a long story short, do not worry, your mortgage cannot change any terms of the note, although the servicer may change.

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It isn't as scary in the mortgage world as the news likes to report. There are still 100's of investors buying (servicing) mortgages and still more that are holding portfolio mortgages.

Countrywide is in trouble because of their secondary (sub-prime) side. That is where they had approx. 25% foreclosure rate AND because their loan programs were so outrageous - Adjustable Rate Mtgs that were lower than other sub-prime lenders at 100% financing at a 580 score first time homebuyer with hardly any trade line history of paying bills on time. BUT to get the lower ARM, they tacked on a 5 year pre-payment penalty.

THIS is why they are losing so much money. The people who are going into foreclosure because their payments are too high, can't refinance because they have NO EQUITY within the 2 or 3 yr period of the ARM to cover the 5 year prepayment penalty costs.

This is why all the guidelines for underwriting on conventional loans are changing. Plus, all the sub prime lenders who were offering the stated and no doc programs at high loan to values for first time home buyers (and are now mostly out of business - go figure), put too many people in a BAD situation. They were qualified at a higher debt to income to get into the loan and didn't have to prove income and/or debts in most cases. Hmmm.. I guess they just figured out now that those people really didn't make what they said they did.......

GOOD NEWS THOUGH! THERE WILL ALWAYS BE INVESTORS AND MORTGAGE PROGRAMS FOR GOOD, SOLID, "MAKE SENSE", MORTGAGES. So everyone, hang in there. This is just a "weeding out" period to get the BAD SEEDS out of this market place and the honest,well meaning, ethical people will remain.

One last note.... EVERYONE watch tomorrow's HUD announcement....

Increases on FHA limits AND 100% financing without the 3% downpayment requirement....?:wink:

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Talking to a banker friend and he said that things were not really as bad as the news would have people believe. He believes that right now since there is a receptive audience for bad news, alot of companies are taking the opportunity to "clear the books" and dump some bad debt that has been hanging around.

He said a 640 Fico and provable income will soon be good as gold in the market again.

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It isn't as scary in the mortgage world as the news likes to report. There are still 100's of investors buying (servicing) mortgages and still more that are holding portfolio mortgages.

Countrywide is in trouble because of their secondary (sub-prime) side. That is where they had approx. 25% foreclosure rate AND because their loan programs were so outrageous - Adjustable Rate Mtgs that were lower than other sub-prime lenders at 100% financing at a 580 score first time homebuyer with hardly any trade line history of paying bills on time. BUT to get the lower ARM, they tacked on a 5 year pre-payment penalty.

THIS is why they are losing so much money. The people who are going into foreclosure because their payments are too high, can't refinance because they have NO EQUITY within the 2 or 3 yr period of the ARM to cover the 5 year prepayment penalty costs.

This is why all the guidelines for underwriting on conventional loans are changing. Plus, all the sub prime lenders who were offering the stated and no doc programs at high loan to values for first time home buyers (and are now mostly out of business - go figure), put too many people in a BAD situation. They were qualified at a higher debt to income to get into the loan and didn't have to prove income and/or debts in most cases. Hmmm.. I guess they just figured out now that those people really didn't make what they said they did.......

GOOD NEWS THOUGH! THERE WILL ALWAYS BE INVESTORS AND MORTGAGE PROGRAMS FOR GOOD, SOLID, "MAKE SENSE", MORTGAGES. So everyone, hang in there. This is just a "weeding out" period to get the BAD SEEDS out of this market place and the honest,well meaning, ethical people will remain.

One last note.... EVERYONE watch tomorrow's HUD announcement....

Increases on FHA limits AND 100% financing without the 3% downpayment requirement....?:wink:

Well said.

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Talking to a banker friend and he said that things were not really as bad as the news would have people believe. He believes that right now since there is a receptive audience for bad news, alot of companies are taking the opportunity to "clear the books" and dump some bad debt that has been hanging around.

He said a 640 Fico and provable income will soon be good as gold in the market again.

I agree 100% with this statement. I think that some consumers are vulnerable right now and will grasp every little bit of info they can, whether it directly or indirectly affects them. It is indeed made out to be worse than it actually is. I truly believe that this "crisis" is going to weed out all the crappy, unprofessional, realtors, brokers and unethical douche bags that jumped on board while everything was hot, just to make $$.

End of rant.

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