Countrywide slammed in NYTimes

Good morning again. If you work in the executive suite at Countrywide Financial, or in public relations, your three least favorite words this morning are probably these: "By Gretchen Morgenson."  That is because Morgenson, a hard-hitting, Pulitzer Prize-winning reporter for The New York Times, is again taking Countrywide to the woodshed in the Sunday paper.

Countrywide has recently been touting its extensive efforts to help borrowers avoid foreclosure. Morgenson's story says those claims are highly dubious. Highlights:

--"... borrower advocates who work with a broad array of lenders say that none make it harder to modify loans than Countrywide."
--Countrywide's foreclosure prevention team is hard to reach and often hostile to borrowers, who are often charged unexplained fees during the foreclosure process.
--While touting its efforts to help borrowers in the media, Countrywide recently told investors that it rarely provides workouts that reduce interest rates -- the exact relief that many borrowers are seeking.

Countrywide, Morgenson reports, "strongly disagrees. Last week, it described its efforts on behalf of troubled homeowners. 'Our No. 1 priority is to help borrowers stay in their homes,' said Steve Bailey, a Countrywide executive, in a news release."

Joining Countrywide in strong disagreement is Calculated Risk, which cites chapter and verse of what it considers Morgenson's "terrible reporting" on this story.  Example: Morgenson points out that, for  Countrywide, foreclosure is a "profit opportunity"; CR's response: So what? CR argues that, for a loan servicer, every loan is a profit opportunity; otherwise, what's the point of being in the business of servicing loans?

Your thoughts? Comments? Email story tips to lalandblog@yahoo.com.
Hat tip: Sunsetbeachguy

Comments

[Hula Girl]

My only question is why is Mozillo still a free man? He admitted to not issuing 1099's.(Hello IRS, why aren't you on his back?). I think that's called tax fraud. And his stock sales, er, dump, smells like the LA River after a rain.
So, why is anyone surprised he'd screw over his mortgagees? He makes Cheney look like a nice guy.

[Hula Girl]

P.S. I just opened the envelope to this exclusive Countrywide offer - where, "As a valued Countrywide customer, I shouldn't have to worry about rising monthly payments. (I have a fixed loan). That's why they'd like to extend this "special invitation" to review my mortgage and see if refinancing my meet my families CHANGING FINANCIAL NEEDS." After reviewing my 5.625% fixed rate mortgage, a 10 year ARM may be my best solution And furthermore, I don't have to verify my income."

Can I just say how much I hate having CW as my lender - It's like owning stock in Halliburton. Needless to say, I won't be picking up my phone and dialing India.

[Kaye Thomas]

This is not a surprise.. I have friends who have a loan from CW.. they called and could not even get anyone to talk to them as they were not yet behind in payments.. once they were behind.. they were now "bad people" and were told "too bad.. you are now behind and nothing we can do"

[Bill Bond]

"After reviewing my 5.625% fixed rate mortgage, a 10 year ARM may be my best solution"

WoW. That's incredible that they would try to move you from a low fixed rate into an ARM. There's no way your mortgage would be lower now or in the future than the deal you have now.

Just goes to show you how desperate they are now and how they'll do anything that will originate a loan and loan fees. Smells like a company on the verge of bankruptcy to me.

BB

[mbob]

The most testimonials per square inch may be viewed at

www.countrywidehomeloansucks.com

where the unwise and simply unlucky relate their experiences.

More coverage, please about the CEO's recent stock sales at what price and what time, in a context of how the company has been doing.

http://ml-implode.com

also bears news and views of the larger mortage loan situation.

[orcadrvr]

Hulagirl:

Please explain the connection between Cheney (your first post), Halliburton (Your second post), and Countrywide.
Is it possible that anything bad in this country can occur without the complicity of someone in the Bush administration? Or Haliburton?
When the only tool in your toolbox is a hammer, pretty soon everything starts to look like a nail.

[Ben Brown]

This CW deal is beginning to look like a communist foray into corporate facism where they accumulate 10's of thousands of foreclosed homes and then turn them over to party loyalists for cents on an already horribly devalued U.S. dollar.

Communists are rich because they get People to work for almost nothing and then beat, jail or kill if they resent it. Actually it's not too much different than the tactics of the so-called evangelical christian elite (of which George W. Bush is a member). To both of these meglomaniacal groups, you get your reward in Pig Heaven.

[NumbersGuy]

Not to say Countrywide is a good company, but I do have to say, these borrowers are not paying their mortgages. Most of these anecdotal stories in the NY times involve people losing their jobs and not making their payments.

Easiest way to prevent foreclosure...pay your mortgage on time! It is very simple.

I am tired of hearing of these "victims" who chose to take on large mortgage payments when they could be renting a place that actually fits their budget. Where is their fiscal responsibility???

[Michael Snyder]

Can anybody say, Loan Shark? It seems the more difficult the circumstances, the more Countrywide treats that client like a cash cow. The creative fees detailed th the NYT article show how deeply Countrywides' tunneled into Bandini mountain. They've made loss mitigation into a cash producing entity that actually hastens foreclosure. Somehow I just don't see any solutions coming out of Countrywide. I do see something that folks can do here "in the trenches". The reason Realtors exist is to protect an unsophisticated market from the types of practices detailed in this article. Granted, it's easy to ride the wave & I'm not singling anyone out for blame; but it's time for the marketplace to do the job the government won't. Stop buying loans from Countrywide. The bottom line's the underwriter these days & I just don't see them cutting Countrywide any slack. I don't see any good reason to expose anyone to the endless nonsense buried in every Countrywide contract. One more good gust of wind and this house of cards is going to come tumbling down. When that happens, you will want to be upwind.

[sunsetbeachguy]

Well and Tanta from Calculated Risk, takes Gretchen to the woodshed repeatedly.

http://calculatedrisk.blogspot.com/2007/09/
morgenson-watch.html

[mark]

go here http://finance.yahoo.com/q/it?s=CFC to see how people have sold millions of shares in the last 6 months alone!

[Hula Girl]

Hulagirl:

"Please explain the connection between Cheney (your first post), Halliburton (Your second post), and Countrywide.
Is it possible that anything bad in this country can occur without the complicity of someone in the Bush administration? Or Haliburton?"

It was a metaphor, o' Great Conspiracy Theorist. Unlike your"Hammer/Nail" analogy which is a cliche.

[Willie]

ORANGE GLOW or MODZILLA, is at it again with his double speak. He tels the public and his clients one thing and the investors another. He is beginning to look like a salamander changing colors according to his surroundings.

[Frisco]

1. Servicers recoup foreclosure expenses because servicers are servicers. Investors are investors. Investors buy the credit risk; they therefore cover foreclosure costs. This is a perfectly normal arrangement. If you think there's a problem with it, can you explain how being reimbursed for an out-of-pocket expense, like a fee paid to a lawyer or an appraiser, is "making a profit"? Are you saying there's a markup in there? Do you have evidence for that?

2. Servicers are not now and have never been required to accept partial payments. Mortgage loans are not free-form Option ARMs where the borrower gets to decide how much principal or interest to pay this month; all of them, even the real OAs, have "minimum payments." If a distressed borrower talks a servicer into accepting a period of partial payments, to be made up later, that is called a payment plan or forbearance arrangement or some other "workout," and it takes the servicer's consent.

3. Putting partial payments in "suspense" means they don't get posted to the customer's account. It does not mean that the money goes into the servicer's own account. Those funds go into custodial accounts to which servicers cannot "dip in." Servicers do receive float income on those accounts, but of course in most cases they are also obligated to advance the full payment to the investor, out of their own funds, until it is collected from the borrower. So advances do offset the float. This entire paragraph is such an egregious mismash that it's unbelievable.

4. Foreclosure is a profit opportunity? What does that mean? That mortgage loan servicing--which unfortunately does include having to foreclose loans when they default--is a profitable business? Well, yes. That's why people engage in it. Is the claim here that an unfair or excessive profit is being made off of foreclosures (but not off of performing loan servicing)? How? Specifically? The "examples" in these three paragraphs don't make any sense.

And I cannot begin to make sense of the "Connor" loan example. With the hashed-up timeline and limited information given it's impossible to figure out. All I can say is bang-up job of reporting.

Ms. Morgenson, if you want to keep up on your mission to portray Countrywide in the worst possible light, you are going to have to get an education from a reliable source at some point about how the mortgage industry works.

[sunsetbeachguy]

Frisco's post is a cut and paste job from Calculated Risk & Tanta.

[Rob]

Ben,
A big Whaaat? We are all driving down the road talking about Houses and you took us on a tour. Where I have no idea.

[Teresa Rothaar]

To be fair, NumbersGuy, one woman in the article was paying her mortgage just fine until she developed breast cancer, which not only knocked her out of work but undoubtedly caused her to rack up medical bills that could have totaled in the six figures.

I know the naive will screech about health insurance at this point. Problem is, lots of people who THINK they have "good insurance" are people who have never had to use their "good insurance" for anything more serious than strep throat or a sprained ankle. When those same people, or their spouse or child, suddenly face an illness as grave as cancer, they quickly find out that their "good" insurance isn't so good after all.

So yes, I do feel sorry for her. I don't put her in the same category as some idiot who never earned more than 12 bucks an hour in his life, yet bought a $300,000.00 pad with a banana republic loan. What happened to her could happen to anyone.

At the same time though, as a Libertarian I feel the private sector--NOT the gov't--should be the ones to help people like this. (I don't support gov't healthcare either; what we need is a truly free healthcare market that will offer choice and pull prices down.)