Report: Countrywide to Offer 50-Year Subprime Loans

Man, this one makes my head spin: Countrywide Financial says it is rolling out 50-year subprime loans to pick up market share from battered subprime lenders. I know people are living longer these days, but wow.

Reuters, reporting from a Wall Street conference, says Countrywide CEO Angelo Mozilo unveiled plans for new reverse mortgage products and 50-year-subprime loans, and also said Countrywide plans to add 2,000 sales jobs this year.

Relatedly: San Diego-based subprime lender Accredited Home Lenders says it will be late in filing its first-quarter results, and will report a "significant loss." Accredited said Friday it had cut 1,300 jobs in the first quarter.

Photo credit: NYSE.com

Comments

[Numbers Guy]

Subprime 50-year loans have been around for well over a year now. Along with the 40-year, which is becoming much more common.

[Pumpkin]

Notice that Mozilo said he wont portfolio the loans? This is the same thing that got us to this place in housing to begin with. Lenders willing to underwrite risky loans as loan as they are using someone elses money. Countrywide deserves the downfall that is surely coming, the only issue will be is if Mozilo will successfully sucker someone else to buy the company before it goes down. He is clearly only worried about his personal fortune at this point.

[jbunniii]

As any mortgage calculator will demonstrate, the monthly payment barely changes when you extend the terms of a loan from 30 years to 40, and the change is even smaller when you extend it to 50. In the limit, the payment simply becomes "interest only."

[albert]

Its very simple.
If a person or a family can's afford regular type of a loan with 20% down and a primary loan of 5-6% , fixed, 30 year , then they cant afford to buy it.
Stop creating new buyers with ridiculous traps like ARM , equty loans, interest only.

[TR]

I am not a finance guy. So please pardon my ignorance. While I would never take out a 50 year loan, what makes a 30 year loan truly any better? There is a lot more economic uncertainty for today's middle class when compared to the previous generation. I am not a homeowner, yet. At this point I can not even fathom a 15 year debt, let alone 30 years.

I look at it like this: The fact the average American needs multiple decade loans to purchase property is proof that we can not truly afford any of it, even when we buy it with a 30 year fixed loan.

[ProOwners]

Hi All –

Apparently Countrywide is under investigation for misleading and falsely advertising its rates and programs to customers and if you recently purchased a loan, you should check out http://www.hbsslaw.com/investigation_Countrywide.htm;jsessionid=aggY4FV553We.

There have been several reports lately that indicate aggressive sales and telemarketing tactics were used to get people to buy high-rate loans, when they didn’t even qualify.

The company’s interest is apparently solely focused on its bottom line and not your financial well being.