Mozilo on distressed borrower's appeal for help: "disgusting"

In an e-mail inadvertently sent to a distressed homeowner trying to avoid foreclosure, embattled Countrywide Financial Chairman Angelo Mozilo lashed out at an online counseling service for distressed borrowers, calling the website's efforts "unbelievable" and "disgusting."

"This is unbelievable," Mozilo wrote in the e-mail, which was posted on a forum on the website LoanSafe.org. "Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the internet. Disgusting."

Read full coverage of the e-mail flap from the Los  Angeles Times here.

Mozilo was responding to an e-mail from Daniel Bailey, who wrote a "hardship letter" to Mozilo and 16 other Countrywide employees. Bailey acknowledged he wrote the letter using a format provided by the website LoanSafe.org.

In his original e-mail, Bailey requested a loan modification, saying he was unable to make rising payments on his adjustable rate mortgage. "The main reason that caused me to have a hardship and to be late is my misunderstanding of the original loan," Daniel wrote in his e-mail to Countrywide. "I was told that after the first year of payments, I would be able to refinance to a better fixed rate -- then the bottom fell out of the industry. My payments for that first year were on time. I also lost my second income due to physical conditions in a very physically demanding industry."

At least two other housing blogs wrote about the exchange Tuesday. On Tuesday evening, Countrywide issued the following statement: "Countrywide and Mr. Mozilo regret any misunderstanding caused by his inadvertent response to an e-mail by Mr. Bailey. Countrywide is actively working to help borrowers, like Mr. Bailey, keep their homes."

After receiving the "disgusting" e-mail comment from Mozilo, Bailey wrote a second e-mail to Countrywide, acknowledging he had consulted an online forum for advice in drafting a hardship letter to Countrywide: "In attempting to come to some way to save my home, I took the advice on forming my hardship letter from a forum. Why? Not all of us have been to a university to study business and we need some help in dealing with these matters. (perhaps, if we had, we would not have fallen for what we did, to start with).

"To have recieved the e-mail that I did, stating by one of your employees, that what I did was 'disgusting' and 'unbelievable' has been just about the final straw. I am trying to do the right thing, I am trying with every ounce of what I have left in me not to blow my brains out over losing the home I have been in for 16 years. The only hope I had left was that perhaps the countrywide company did want to help the people it is servicing ... then I receive that responce to my letter. Just great. Now I know, that it is all a nice fat laughing matter to those who are supposed to help."

Mozilo has been heavily criticized for reaping huge gains by selling Countrywide stock while the company's value was collapsing and the mortgage industry was in crisis. The Times reported he was paid $48 million in compensation in 2006, and cashed in stock options worth $140 million in 2006 and 2007.

LoanSafe founder Moe Bedard said he founded the website to help homeowners find information about working with their lenders to avoid foreclosure. "I knew there was nothing on the Internet to help people work out their mortgage loans," he told L.A. Land. Among other resources, the website gives borrowers e-mail addresses and phone numbers for bank executives who handle loan modifications. It also provides sample "hardship letters" to help borrowers make a written appeal for a loan modification. Bedard says his advice has helped 80 homeowners avoid foreclosure.

Bedard's sample loan letter begins: "I am writing this letter to explain my unfortunate set of circumstances that have caused us to become delinquent on our mortgage. We have done everything in our power to make ends meet but unfortunately we have fallen short and would like you to consider working with us to modify our loan. Our number one goal is to keep our home and we would really appreciate the opportunity to do that."

Bedard said he encourages distressed borrowers to use the format of the letter and then to "make it your own, and don't be too lengthy."

Bailey's e-mailed hardship letter to Countrywide, which he posted online, begins: "I am writing this letter to explain my unfortunate set of circumstances that have caused me to become delinquent on my mortgage. I have done everything in my power to make ends meet but unfortunately I have fallen short and would like you to consider working with me to modify my loan. My number one goal is to keep my home that I have lived in for sixteen years, remodeled with my own sweat equity and I would really appreciate the opportunity to do that. My home is not large or in an upscale neighborhood, it is a “shotgun” bungalow style of only 900 sq. ft. built in 1921. I moved into this home in May of 1992 … this was the same year I got clean and sober from drugs and alcohol, and have been ever since, this home means the world to me."

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Getty Images

Comments

[KH]

I know we should feel sorry for this unfortunate situation, but shouldn't people take responsibility for their actions. Like the article stated, shouldn't people understand what they are doing when they borrow hundreds of thousands of dollars. Why are the banks the bad guys all of a sudden. They were just trying to make money for their shareholders. The speculators are the ones who made the decision to borrow at a low rate and hopefully sell at a profit. These people speculated and loss. It's amazing how nobody felt sorry for them when they were making gobs of money. Now the tide has turned and they want sympathy or forgiveness. I just don't buy it. People need to be responsible for there actions.

[perks]

At last the truth comes out that we all already knew: Angelo is a bad, bad man. Bad man. Bad. Bad. Let me say that one more time. Bad.

I at least hope he had a shred more respect for his customers when he was reaping millions upon millions of dollars from them. Somehow I doubt that.

Speaking of "disgusting"...I made the mistake of viewing that photo in full-size mode. Yecch.

[david]

Whoops!!!!

How do you get to be Chairman and not even know how to work your email? Oh, I remember now, you have people for that. And they wonder why they are seen as out of touch.

That said, Mozilo's right, actually. Just inexcusably sloppy.

[greg]

When is Angelo's perp walk?

[Pat]

Talk about bad PR at the worst time for Countrywide...but seriously, encouraging homeowners in distress to spam top management at the company with form letters that are emotionally appealing but completely devoid of content is hardly responsible advice. Don't expect Angelo to bail you out between his 11am tee time and 4pm tanning salon appointment. Talk to the appropriate asset manager, and negotiate a solution. There are people who actually care (somewhat) at these companies, but approach the problem in a level-headed way; explain how their working with you would benefit both parties, since otherwise they'd just have another foreclosure on their hands. They don't want this. They're up to their eyeballs in them as it is, so they'll work with you.

Bad advice, but that's what gets you in the papers, I guess.

[bkl]

He bought the house in 1992. He doesn't mention any refinancing. So what were loan rates in 1992 and why would it take 16 years for a reset? Something seems wrong about the email.

[Arti]

Much as we must admit (1) that Mozillo is a profiteer who was at the very top of the ponzi scheme, and (2) that his characterization of that website's services is curiously over the top, how exactly does that exonerate the greedy or reckless (take your pick) home buyer? Mozillo was at the top of the ponzi scheme, the buyer was at the bottom of it; they're still part of the same scam, one was just far cleverer about getting his dough.

[E]

So how much cash did this guy pull out of his house?

Need more details.

Wouldn't ever expect any kindness from Mozilo...he's laughing all the way to the bank.

[RG]

I agree that we all need to be personally responsible for our actions. That said, such people as Mozilo ought to be held personally responsible for what they have put others through. The mortgage industry has been rife with lies and misrepresentation, preying on others with less knowledge than they have. That misfortune happens to people is fact. That people like Mozilo, credit card companies, and other predators take advantage of others' troubles and ignorance is also fact. The ignorance of the borrower does not excuse the actions of the predator, or vice versa.

Which is why we need laws (with teeth) that will regulate the credit industry. An unregulated market will always tend to excess, with people getting hurt by the actions of others. Banks will make unwise loans to people who can't afford it, borrowers will borrow too heavily at seemingly generous terms which can become predatory in an instant, and speculators will do what they can to cause -- and cash in on -- human misery.

Yes, we should all be responsible for our actions. But even God regulated the market for ancient Israel, laying down laws that mitigated the harsh character of a perfectly free market.

Not a bad example to follow.

[The Duke of Moral Hazard]

Isn't it a wonderful life after all? Dan Bailey writes a note to Angelo Potter who cc's Steve Bailey, the "Senior Managing Director and Chief Executive Officer of Loan Administration."

There was a story a while back about how borrowers in another state were counselled to harrass CW execs at their homes -- and the harrassment worked. Bad advice that got results. Moral Hazard at its finest.

[Jenna]

I feel sorry for the guy, but remind me again why Countrywide is "supposed" to help homeowners get out of contracts that they voluntarily entered into? If you don't understand something, then you either don't sign it or hire someone to explain it to you.

[shell]

There are many other borrower types in this mix who are not getting through to the decision makers. I.E. People with things like unexpected medical hardships, or property damage, etc.. I imagine this borrower emailed the top brass, because no one individual gets assigned to your case and they are using call centers in India who tell you that you have qualified for work-out and even tell you your new payment. Three weeks later you call because you didn't get the expected package, only to discover there was no work-out. They tell you they are addressing this recurring problem with the India call center which is giving out bad info. Documents keep disappearing and your previous conversations are not logged. BTW- hardship letters are asked for by Countrywide, so most people feel this is their one shot at being heard. It's understandable that they would turn to someone's advice on writing it.

What's truly "disgusting" is how Mr. Mozilo's testimony in March before the Committee on Oversight and Gov. Reform compares to his email response.

[I CAN READ THE FINE PRINT]

I have to ask the question. Why did I work hard and go to college?

I can't feel sorry for someone like that.

As a previous statement stated:
"That said, Mozilo's right, actually. Just inexcusably sloppy."

[arroyogrande]

"He bought the house in 1992. He doesn't mention any refinancing."

Hmmm...

"...so he wouldn't lose his home of 16 years. Bailey said he took out the adjustable-rate mortgage without realizing how it worked and had been told incorrectly that he could refinance after a year."

Sounds like a cash-out refi...he should have been at most 15 years away from paying off his house...and considering inflation, his monthly payment must have been WAY low. Looks like he might have "fallen victim" to the Liberate Your Equity disease that that been going around. What happened to the money? What did he spend it on?

I feel sad that someone in the mortgage biz as much as promised him that he'd be able to refinance in a year, and he didn't supposedly know much about the terms of his loan, but as KH said, when you borrow HUNDREDS OF THOUSANDS OF DOLLARS, should you read and understand what you are signing. I'm sorry, but "everyone else was doing it", "I trusted my loan officer", and "I was just so excited/emotional that I signed it anyway" just don't cut it for borrowing that much money, for a cash-out refi or for a home purchase.

I know that some of you have been numbed by the past 4 years of house prices in LA, but hundreds of thousands of dollars is still a lot of money for most people. I don't understand signing a loan for amounts like that when you don't understand or read the loan terms. "Everyone else is doing it" doesn't work when my kids want to stay up late. I don't understand how it can work as an excuse for borrowing hundreds of thousands of dollars you cannot pay back.

"received the e-mail that I did...has been just about the final straw...I am trying with every ounce of what I have left in me not to blow my brains out over losing the home I have been in for 16 years."

For those that have strong emotional attachments to your current house...would you resort to blowing your brains out if you were to lose your current house? I hope the guy does OK; however, that bit seemed over dramatic. Is a house worth 'blowing your brains out', especially if the reason it was in jeopardy was the result of a (presumed) cash out refinance that netted you $$$?

- arroyogrande

[Habib]

This is disgusting – that anyone would side with this borrower.

Yes Mozillo makes a lot of money but he is just a professional manager of a bank – he has a job just like most of you – it just happens to pay a lot more. He is not at the top of a “ponzi scheme” like some earlier miss-informed poster mentioned.

The bank itself and its shareholders have gotten killed on loans just like this – hard to figure out how they are the winner when billions of dollars or write downs and shareholder wealth are evaporating – not to mention the layoffs.

It looks to me like this bozo took some equity money out thinking he could do a quickie refi later….and …..we are supposed to feel sorry for this guy? If you ask me, he has made out great effectively stealing money from the bank. Yes CW was dumb to make the loan {HELOC?} in the first place but they are taking the loss now while this guy took his cash and bought boats / vacations / SUVs and whatnot and now wants “relief.”

The last time I bought a house – I had to sign stacks of documents line by line and then another stack saying that I understood what I was signing and then another saying that I was voluntarily signing the documents of my own volition……………… I am not sure how you could dumb this process down (ie “Regulate”) any more without including some sort of IQ or reading comprehension test.

I have yet to see a case of home foreclosure where the borrower was not totally responsible for the situation they were in. I am sure I will get sick later today reading all the “banks are evil”, “they preyed on people”, “we have to hold the industry accountable”, “we need regulation” posts on this blog. I will still probably read them anyway.

Just makes me sick.

[Moe Bedard]

This email is an inside look at inter office communications that was not supposed to be read or reported on. An email sent by a gentleman that was just trying to explain his hardship and set of circumstances that are causing him pain and suffering.

Yes, pain and suffering.

Dan, just like millions of homeowners across the country are suffering in their homes. Many can't sleep or eat right. Their performances at work are severely impaired by stress, lack of sleep and hope. Dan is human just like you and I and so are the millions that have suffered a foreclosure or are suffering.

People who just need a little help with their mortgage to save their sliver of the American Pie that they call home.

To many of you it is just a contract and a business deal. Dan signed the paperwork, so Dan should suffer his fate you say. OK, fair enough.

But who wins there. Who, YOU?!!!!!!! Let me clue you all in on something. There are millions and millions of Dan's out there and if we let them all suffer their fates, then you can kiss what is left of our economy good bye and that does not address the social devastation that will result from this.

The sociological impact on families and communities from this is just devastating. That's what it really all comes down to in the end, the impact on our society as a whole, not just with Dan and the Mozilo's of the world.

[ProfessorShays]

Frankly, while we all understand that the importance of being responsible for our actions, all one has to do is to view a few Countrywide commercials to understand that the sort of lending they promote suggests ignoring the financial realities associated with borrowing. The term "equity stripping" and "Countrywide Financial" are synonymous. Under Mr. Mozilo's leadership the business plan of this Company has gone from prudent lending practices to reckless loan shark tactics.

In a few months Countrywide will either disappear as the result of a poorly planned BofA acquisition, or through a liquidation proceeding. Unfortunately as a direct result of poor business practices.

Daniel

[gina r.]

I spent close to 30 years working for Countrywide. From my perspective Countrywide always attempted to do the right thing. We all worked hard to lower the barriers of entry into homeownership for lower income and minority first time homebuyers. Systems were employed to assure against disparate treatment and discrimination in underwriting. The company spent hundreds of millions of dollars in developing foreclosure prevention protocols and was the year in and year out leader in lowering the cost to borrowers in the mortgage process. I feel that throughout our 40 years we have always been guided by our desire to make a positive difference in the lives of the American people, our employees and our shareholders.

[normanpheeny]

Yes, there are lot's of disgusting things about this. Loanworkout.org titled this article - "Email Below Calls Homeowner Disgusting". Hmmm, not very correct. Mozilo is calling site's like Moe's disgusting - to be more truthful. Moe is in the loan modification business/industry - just to give everyone full disclosure and a path to "follow the money".

[Kevin]

Honestly, the customer is retarded. He didn't understand the loan he got? Perhaps all the alcohol and drugs he used burned out the brain cells. If he didn't understand the documents, he had the right to an attorney like every other customer. No one forced the pen into his hands to take out a bad loan.

[Sharon Burton]

At the risk of getting yelled at here, when I bought my house 15 years ago, I didn't understand the paperwork I was signing, either, And I'm highly educated. But I'd never seen this sort of document and had to have each paragraph explained to me. And hope that the explanation was correct.

Remember that normal people simply don't understand legal-ese generally. So they should ask what each paragraph means, But they may not get it explained to them correctly. Or they may not understand what is being said to them. And everyone is looking at them as tho this should make sense. Few people want to look stupid at that point so they sign.

I know several educated people who had their refi paperwork explained to them at signing and it wasn't what they were told the deal was going to be. Or they explanation didn't make sense to them. But they signed because everyone was looking at them as tho this was perfectly reasonable.

I can see how people signed docs they didn't understand. Does that get them off the hook? Well, no, but I easily see how it happens.

[lil_gaucha]

When we were shopping for loans in Vegas a year ago we had a hell of a time getting anyone to take seriously our desire for a 30 year fixed with 30 percent down.

With the exception of Wells Fargo, every single lender tried to get us into a nothing down, adjustable rate mortgage and "use the cash for a pool."

I kid not.

And the paperwork on these things is confusing even for two well educated first time buyers like ourselves. At some point you just have to stop re-reading and trust your loan agent.

We were lucky that all the legalese in our contracts said what we wanted it to say. But many others who are less educated with less scrupulous real estate agents and title officers and loan officers have been hornswaggled and duped.

Some unscrupulous lenders took advantage of people they knew couldn't understand the implications of what they were doing. And now we call those people who lost their homes greedy.

[Ann]

"especially if the reason it was in jeopardy was the result of a (presumed) cash out refinance that netted you $$$?

- arroyogrande"

It looks to me like this bozo took some equity money out thinking he could do a quickie refi

-habib

Why are ALL of you presuming that there was a refi or cashout for frivilous reasons?

The letter says that the house was built in 1921 which means it is 87 years old.

Perhaps it needed a new roof or the foundation needed repair or the wiring and plumbing upgraded or the windows replaced.......

Perhaps he had some massive medical bills - not everyone has health insurance that pays all but $500 of medical expenses and not everyone has helath insurance at all! A trip to the emergency room for a broken wrist can easily run from $10,000 (no complications and simple followup) to over $35,000 (complications and intensive followup.)

Perhaps it was a job loss so he needed money to hang on until he found another job. (And yes, while one should have 1 years living expenses in the bank, the people who make your meals in restaurants, repair your car, install your cable and do a host of similar jobs are barely getting by and forget saving.)

Perhaps it was a divorce and he had to refinance to buy out the ex-wife.

The sanctimonious rush to judgement is a rather over the top.

[Willie]

I think both of them are disgusting and pathetic, unless the borrower never used his home as an ATM to finance a lavish and unnatainable lifestyle, then he deserves the help, otherwise he is disguting and pathetic. I need not to say anything about "Orange Glow", he is pathetic, disgusting, and ORANGE!.

[Ragnar]

Unfortunately, Countrywide is not under any obligation to treat their customers well, even if staving off forclosures is mutually benefical. Too the observer, Mozilo has gained a lot of wealth, but from his perspective he has probably lost a lot of wealth. It's understandable that he is grumpy, but that it no excuse to take it out on a customer.

We do need more information about Bailey Bedard's story. Even if he did take a cash-out HELOC, that does not mean that he blew it on cars and vacations and stuff. He could have had some serious medical bills to pay, as evidenced by his comment about a physical injury that has kept him from working his second job. Still doesn't excuse him from not knowing what he is signing, but tough times sometimes necessitate taking risks to stay afloat.

[Maggie Knowles]

I remember every lender was saying the same thing to every borrower, get this adjustable rate mortgage now, you can refinance to a fixed rate six months to a year later. LENDERS LIKE COUNTRYWIDE LIED TO THEIR CUSTOMERS. If they weren't lying, why didn't Countrywide (and other companies) have a team of loan officers ready to refinance these customers to the fixed loans six months to a year later?

[LA-Architect]

i have a friend who is going to countrywide for a loan modification. actually the person wants a significant reduction in the principal and drastically reduced interest rates.

From my perspective that just sucks. Rewarding bad financial decisions is wrong. So the house ends up in foreclosure. A prospective buyer can then buy this house at the "TRUE" market value and be able to afford the loan. It's a "lose you gambled"and "win you waited for what you can afford" scenario.

I can't believe the bailouts for gamblers.

[TheBeefIsPrime]

This is a NON-story. It's just plain ridiculous in every way, shape, and form.

So yeah, how very predictable that you picked up on it for this illustrious Internets blog. Whats really scary is that it made the front page of the LA Times website. Talk about dinky dink.

[Tombstone Realty]

If Mo-Zilla wasn't Mo-Zilla - I'd totally agree with his sentiment that it seems everyone and their uncle is trying to get out of a contract they legally signed (refi, mortgage, no matter).

However, I can't feel sorry for that lizard, so I laugh that he's getting bashed, and that Bush's so called "rescue plan" has been revealed as the charade it is.

I do have a problem with Moe Bedard's post however.

I had really wanted to buy, FINALLY, my own place, that no one could evict me from because they were turning the apartments into condos. A place for *me*. To live.

But I looked at the market, and I knew that the prices were overinflated. I also knew the market would subsequently collapse. I knew that everything from tax revenues to neighborhoods would disappear overnight if I helped run things up. So I held back.

Unfortunately too many people didn't think "Oh, this is where I'll raise my children". No, it was "Oh I'll flip this in two years and use the profits for my flat screens and Hemi truck".

IF people had thought things through, instead of hoping for easy cash, then we wouldn't be facing this current situation. It's the homeowners' *fault*. Between the overstated equity, and using HELOCs to buy junk, they overinflated the economy. States started overspending their 'windfall" of tax revenues. Then the bottom fell out, and now we're looking at not having enough teachers and firemen. No amount of "bailout" is going to restore the taxes for these people's jobs.

The prices would have stayed in line with salaries if people refused to pay them. It is personal GREED that has damaged the economy, and ruined these people's lives. It's self-inflicted pain and suffering.

I'd love to have my own little Sliver of the American Pie too, you know. But I am not going to sacrifice my future to get it.

[Dean Ross]

I've never considered myself the sharpest tool in the shed. But if there is one thing I know, I would never sign anything I did not totally understand. I would spent money for the best R.E. attorney around to explain in simple terms what I am getting into. You signed a contract and did not understand! Your a complete idiot and deserve what's coming to yea...............

[jbunniii]

Countrywide has nothing left to lose at this point. Why would they agree to "work out" their customers' loans? The deal is very simple: pay your mortgage on time, or give the house back to the lender. The exact same thing is true for renters, and no one thinks it should be otherwise, or that tenants should be bailed out.

[RadioManTodd]

In a way, I think he's right. I work in a field where all day long I take appeals from people saying "I can't pay" (utility industry, not anything to do with housing/mortgages/banking) and you'd be floored at how unoriginal every statement is.

"I've been out of town....."

"I've been out of work for a couple months" (doesn't explain the fact that you've been a deadbeat for the last 3 years)

"I'll have more money on Friday...."

Its the same thing, day after day, customer after customer. If anyone can come up with an original excuse, I'll usually roll with it either because a.) they're really in a legitimate bind, or b.) were at least dedicated enough to put some effort into it.

[rgb]

This guy obviously took as much money out of his house "of 16 year" just a year or two ago. Now he wants the bank to frogive his stupidity! What did he do with 16 years of equity?? Where is all that money now?

[G]

Wow! It’s easy to attack the victim! I know there are victims and predators on both sides of the fence, but my guess it the people who’s main purpose was profit not find a place to live who is the main predators. I had my own personal run in with a predator lender who will tell anything over the phone to get you to sign the loan docs but tries to change things for there benefit at closing! It happened to me, it was a refinance I was going to be a fixed rate jumbo loan but at last minute they pulled some bad info from my credit report and said they could not finance the loan at a fix 5.25 but could do a variable rate of 8.5! This days before closing and after wasting 4 weeks with them and all the fixed rates elsewhere had move more then a 3/4 points!!!!! It took an additional 3 months of letters, phone calls, and finally a complaint over bait and switch to a regulatory agency to finally get my fixed rate loan! Where did all the commissions and profits go for all the bad loans they put people in!

[TrojanDLA]

I can only laugh. If I was Mozillo, I would've sold this puppy in 2006 to a private equity group. The key is that he KNEW this whole subprime nonsense was a house of cards. With that knowledge, he should have had an exit strategy. Now, he's going to go down with the boat.

[Mr.Roboto]

>Remember that normal people simply don't >understand legal-ese generally.

Hire a lawyer. Let him/her to translate it for you. Simple.

>Perhaps it was a divorce and he had to refinance to buy >out the ex-wife.

And why should CFC care about this?

>But who wins there. Who, YOU?!!!!!!! Let me clue you >all in on something. There are millions and millions of >Dan's out there and if we let them all suffer their fates, >then you can kiss what is left of our economy good >bye and that does not address the social devastation >that will result from this.

Almost like reading Marx/Engels and their Communist Manifesto.

[fred]

He's actually right. These people are disgusting. They bought homes thinking they were going to flip them in a year and make a nice chunk o' change. They were suckers. Suckers shouldn't be rewarded.

[arroyogrande]

"Why are ALL of you presuming that there was a refi or cashout for frivilous reasons?
The sanctimonious rush to judgement is a rather over the top."

So we can probably agree that he *did* take cash out of his house, correct? What he used it for, we don't know, but we can agree that he got *something* out of the decision to take out the new loan, correct? Perhaps as much as hundreds of thousands of dollars?

"...Perhaps it needed...
...Perhaps he had some massive...
...Perhaps it was a job loss...
...Perhaps it was a divorce...
"

Haven't people been losing their houses due to job loss, divorce, medical expenses, etc. since the beginning of time? Wasn't the last housing downturn in SoCal at least partially caused by aerospace and defense industry jobs disappearing from SoCal? Why didn't we "bail out" these people? And people that lost their jobs in 2001? And 2002? And 2003? Should it become a permanent law that renters and homeowners pay (through taxes) into a "prevent homeowner foreclosure" fund?

I can understand feeling sorry for someone like this, but at some point, the people responsible (both the borrower AND the lender) need to own up to the actions they chose. It's sad that people lose their houses to job loss, divorce, and medical emergencies. However, it has *always* happened that way. If you buy 'something' expensive, use it for collateral on a loan, and then (for whatever reason) can't repay the loan, you may lose that 'something'. Life doesn't end just because you lose that 'something'. You move on, and try again later.

"Some unscrupulous lenders took advantage of people they knew couldn't understand the implications of what they were doing. "

"But they signed because everyone was looking at them as tho this was perfectly reasonable."

I can understand that. However, as I said, "everyone else was doing it" hardly cuts it when you are borrowing hundreds of thousands of dollars. Perhaps it's time that the Real Estate establishment starts educating people that this is a REALLY BIG DECISION, one that you shouldn't flippantly agree to just because "you really *love* that house", or are "really excited about all of th money you are cashing out".

"But who wins there...if we let them all suffer their fates, then you can kiss what is left of our economy good"

You mean the economy of having a negative savings rate, and of our fellow Americans (aka "consumers") buying more and more stuff on credit while wages stagnate, getting more and more in debt buying stuff with money we borrow? You mean THAT economy?

I'm sorry, but that economy - that Ponzi/pyramid scheme of consumers using credit to buy stuff they cannot afford, creating profits in the lending and investment industry, and thereby loosening up even more credit for people to take out and buy more stuff, and so on and so on - is gone. Get used to it.

The sooner we get ourselves to a sustainable economy, the better.

"The sociological impact on families and communities from this is just devastating. That's what it really all comes down to in the end, the impact on our society as a whole"

What sociological impact? Families losing houses will survive. They will get by. People (including myself) will and do help them. Losing a house is painful, distressing, and embarrassing. However, as all of us would agree, "it's not the end of the world". You can rebuild and move on from it. Yes, it's hard. Yes, it requires work and sacrifice. Yes, it will be a while before you can again afford a new car or a plasma TV. But families can and will get past it.

And maybe, just maybe, people in our nation will learn not to take borrowing hundreds of thousands of dollars so flippantly or lightly.

- arroyogrande

[Aldo818]

Wow, there seems to be a lot of soap box preachers here that like to talk about personal responsibility.

Do any of the "personal responsibility experts" here have anything to say about a company that lended out it's shareholders money to people that couldn't pay it back?
Can you say something about the lending industry ignoring the fact that incomes in there main markets did not match the loan amounts?
How about continuing to lend outrageous amounts despite many experts and Economists declaring that the American consumer has never been under more debt for the past 3-4 years?

I would have to agree that there is some lack of personal responsibility on a lot of borrowers. However, every agent, broker and bank knows that they cannot loan money out to just anyone that asks.
It is the responsibility of this trio of players to make sure that they lend money to only those that can afford to pay the loans back. That is their responsibility to their coworker, employees and shareholders. I see a lack of personal responsibility in the leadership of those institutions.

"Disgusting?" Does anyone think that it is disgusting to watch Mozillo swimming in his billions of dollars as thousands are laid off from his company?

There was a point when I believed in what CW was doing for the average Joe. Maybe the problem was that leadership just got too greedy. And now, the average Joe is up **it creek.

[The Duke of Moral Hazard]

Habib, Gina, you really don't get it? Habib, I think our society, in general, blames the drug dealer much more than the user. You cut off the supply, you have no more users; you attack the users, it just gets worse.

"Just makes me sick." Hey, you and Mozilo both feel sick over this. Great minds think alike?

Gina, your kool-aid... oh for Pete's sake... girl you've been brainwashed. If they wanted to maintain underwriting standards, they would have. They didn't. Repeating back what you heard at the department meetings really doesn't change things.

"I feel that throughout our 40 years we have always been guided by our desire to make a positive difference in the lives of the American people, our employees and our shareholders."

Yah, Angelo says the same things when he testifies before congress... pretty hollow at this point, what?

"We all worked hard to lower the barriers of entry into homeownership for lower income and minority first time homebuyers."

Well gosh geewillakers, maybe this marketing slogan reflects part of the problem. Let anyone borrow money, then pass on the risk to the taxpayer, and guess what... doesn't work out so well, DOES IT?

Sharon: "At the risk of getting yelled at here, when I bought my house 15 years ago, I didn't understand the paperwork I was signing." Don't feel bad at all -- I've known good attorneys (even real estate attorneys) that didn't undrestand portions of loan documents.

Maggie: "you can refinance to a fixed rate six months to a year " This was pretty common during the refi craze. It was called churning. They didn't need a team as individual loan officers & brokers would give someone a cash out refi, wait a few months, call em again, give em another one, etc.

[Not Warren Buffett]

It appears that the borrower is one of those who tapped into the equity of the rising home prices and have now been stung by the fact that: He has to pay back money on a loan that he agreed to.

I guess the borrower thought that home prices would continue to appreciate at 20% a year, forever, and that he could keep tapping into his home's equity, forever.

Mozilo is right, disgusting behavior on the part of wreckless borrowers.

[Free Loss Mitigation Housing Counseling]

I just want to remind folks that none of us are immune from a financial hardship. It takes a long time to payoff a mortgage and most of us are only a pay day away from being in default. The savings rate in our country is at a negative and "none of us" have job security. We can't point fingures and we have to work together to help people stay in their homes and help mitigate foreclosure losses for the lender, and the blyte foreclosures bring to our community. For free loss mitigation counseling email me at do@securecollateral.com.

[Phyllis Harb]

Yes, the homeowner spent his equity and yes that was irresponsible.

But it IS likely that he really didn’t understand the loan and the ramifications. When was the last time you signed a set of loan documents from a lender? They are unbelievably complex; I am in the business and it is difficult for me to understand. Compound that with new and inexperienced loan people – it was a recipe for disaster.

[JPG]

gina r.:

Did you work in the PR department at Countrywide? Or did you just leave the company before they started pushing adjustable rate interest-only liars loans and relaxed their loan standards to the point where my three-year-old daughter could have qualified for a $500,000 mortgage? Because your version of a responsible Countrywide doing the right thing just doesn't match with the very well documented reality of a company that, if it wasn't leading the charge to give money to anyone who asked, at least was following everyone other lender down that path. The number of defaults and foreclosures they have had, without some horrible economic down turn causing them, is further proof that Countrywide was giving tons of money to people they should have known could never pay it back. Just from a business standpoint that doesn't sound like doing the right thing to me.

Habib:

While there may be stockholders, employees and ex-employees of Countrywide who are hurting these days, I guarantee you Angelo Mozillo is not one of them. Sure his remaining stock and options are now worthless, but he banked a lot of cash in the last few years (from the outside it sure looks like he saw this coming and started dumping stock as fast as he could). We will probably never know the whole truth, but it appears he was gambling just like everyone else who got caught up in this mess. Only difference is he had inside info that helped him cash out his chips before they became worthless.

[JEremy R]

I really believe there should be government intervention to prevent this from happening again.

I don't want a bailout, but I am starting to believe that some people did get duped, and that isn't right.

The government should do the following.

1) Unsolicited selling of mortage products should be regulated. Anyone selling a mortgage product should be forced to register with the government and get an ID number and mortgage product number. If someone is solicitied for ANY mortgage product, they should be able to go onto a government website, enter the ID numbers, and get a full unbiased opinion on the risks/benefits of the product, and full statistics.
2) First time home buyers (especially those with poor credit) should be forced to take a short online course/quiz, or at least watch an online video.
3) THe mortgage broker should be forced to read warnings about their financial product and home ownership, and they should be forced to tell people that interest rates can increase suddenly, or that prices can fall in value causing all sorts of problems. They should give SPECIFIC examples of when BOTH of these things occured in the US. They should also specifically single out NYC, SF, LA, Chicago. This will refute the whole "They aren't building any new land" crap.

There should be a federal minimum standard, but states like NY, CA, and Florida should be allowed to set a standard higher than the federal level.

I think if that happens, then there shouldn't be a bailout.

I truly believe that some people did get screwed, but I am against a wide spread bailout.

[Cal]

DQ CAR city stats are out:
http://tinyurl.com/5ouyry

Monthly stats are highly variable both in price and volume and without historical context they can be pretty meaningless. Regardless people will use them to justify whatever opinion to which they are currently wed.

[bkl]

Here is the beginning of his email. He mentions his "original" loan. There is no mention of a refi. Did the "bottom fall out" in 1993 or did he pay cash in 1992 and take his original loan in 2006? Not likely.

"To Whom It May Concern:

I am writing this letter to explain my unfortunate set of circumstances that have caused me to become delinquent on my mortgage. I have done everything in my power to make ends meet but unfortunately I have fallen short and would like you to consider working with me to modify my loan. My number one goal is to keep my home that I have lived in for sixteen years, remodeled with my own sweat equity and I would really appreciate the opportunity to do that. My home is not large or in an upscale neighborhood, it is a “shotgun” bungalow style of only 900 sq. ft. built in 1921. I moved into this home in May of 1992…this was the same year I got clean and sober from drugs and alcohol, and have been ever since, this home means the world to me.

The main reason that caused me to have a hardship and to be late is my misunderstanding of the original loan. I was told that after the first year of payments, I would be able to refinance to a better fixed rate- then the bottom fell out of the industry. My payments for that first year were on time. I also lost my second income due to physical conditions in a very physically demanding industry. "

[Arti]

I TOOK OUT THE EQUITY IN MY HOUSE TO BUY A HUMMER, AND NOW THEY TELL ME I HAVE TO PAY THE FULL MORTGAGE BECAUSE PRICES WENT DOWN! PLEASE MOZILLO GIVE ME MORE MONEY! PLEASE HILLARY BAIL ME OUT!

[sww]

It is hard for the average consumer to understand language written by lawyers and business people bent on getting money any way they can. Banks only care as long as a signature is on a piece of paper. You can't hire a lawyer to be on your side unless you have money to give. Even college educated people cannot understand the massive amounts of papers that are required to buy a home. When are we going to get back to sanity? Judging from this mess, a long time coming.

[gina]

Kool aid?? Not me, I call things the way I see them and was never intimidated or brainwashed by Angelo or anyone else. The US governement pushed lenders to make loans more affordable , monitered and censored lenders. These loan programs were approved and sold to FNMA and FHLMC. First time home borrowers were given the benefit of credit counseling and terms of the transaction disclosed.

A borrower would apply for a refinance or Heloc and if the appraisal came in low would argue the value. They pulled every dime they could to go on vacation, put in a pool, buy a pony or take the family to Hawaii on vacation. It was their "savings account" and people spent it like crazy. Let's face it, the vacation lasts 2 weeks and you are going to borrow and pay 30 yrs for it? That is crazy!

A very high percentage of the loans in foreclosure are investors and "second homes", right.. A second home that you rent two days after closing.. Lied to get the loan.... No experience in property management, you live a distance away, you don't even hire a property manager. Your tenants trash it, don't pay the rent and then you call CFC and confess that you lied and can't make your payment?

I can tell you horror stories on some of the most stupid reasons why people quit making their payments. Ghosts, snakes, girlfriends, incarceration, I lied about my income because the realtor told me to.

I have seen CFC give forebearance on legitimate reasons for years. When a borrower with a valid issue would make an effort and commit to a payment plan the loan could be brought current and go forward. You want some advice? Don't hide from your lender if you get in trouble, communication is the key to success in working out your problem. Tell the truth and see what solution there is.

[gina]

jpg

No, I did not work in the PR department. I worked both the retail branch system and corporate.

[Nick]

I agree with every word in Mozillo's e-mail. It is because of irresponsible borrowers like this "unfortunate" mortgage holder that the LA area remains, for 14 quarters running, the least affordable major city in the country in terms of owning a home. That man would have not claimed that he "didn't understand" what an ARM is if the market had gone up. And what does the fact that he's lived in the house for 16 years have to do with anything? When people lose businesses that have been in the family for generations, or gamble away family herilooms, do they have some divine "right" to be bailed out? This guys is trying to get away with it and, barring any extenuating circumstances not listed in the article, I have no sympathy for him.

[Ed S]

The situation of the borrower has not been disclosed

You know what the reply was... yet immediately most of the responses on here were regarding how at fault the borrower was for taking money out of his home.

Since obviously most people cannot sympathize, I know that most people will THINK ABOUT YOURSELVES.

PLEASE BE SELFISH IN THIS MATTER [which shouldn't be difficult judging by your comments]. -- the more people default, the more difficult it will be to get new loans (or higher the rates). -- the more people default on existing loans, the worse our credit situation is. -- the more people default, the less likely it is that outside investors will be interested in providing liquidity. -- the more people default [and the less liquidity we have], the lower the dollar goes, the higher oil goes -- the more people default the worse off for

EVERYONE

[unless you were lucky or thoughtful enough to have pulled all your money assuming you have any available from the stock market and throw it into energy or shorting the dollar]

so please... please... I DO NOT WANT A HAND OUT, I DO NOT WANT OTHERS TO GET HAND OUTS [aka : free money from the government]

please ask your congressperson to push on the lenders to do EVERYTHING POSSIBLE to assist people with getting their mortgages refinanced into long term vehicles that will remain affordable.

the entire system is a house of cards, and you are a part of it [assuming you live in the united states]. keep the foundation strong, do what's right for everyone. foreclosures are bad, credit defaults are BAD, free money is BAD.

If the employment picture declines significantly, this is going to go a lot further than just some mortgage defaults and credit defaults. IT NEEDS TO BE STOPPED NOW

[Ed S]

The situation of the borrower has not been disclosed

You know what the reply was... yet immediately most of the responses on here were regarding how at fault the borrower was for taking money out of his home.

Since obviously most people cannot sympathize, I know that most people will THINK ABOUT YOURSELVES.

PLEASE BE SELFISH IN THIS MATTER [which shouldn't be difficult judging by your comments]. -- the more people default, the more difficult it will be to get new loans (or higher the rates). -- the more people default on existing loans, the worse our credit situation is. -- the more people default, the less likely it is that outside investors will be interested in providing liquidity. -- the more people default [and the less liquidity we have], the lower the dollar goes, the higher oil goes -- the more people default the worse off for

EVERYONE

[unless you were lucky or thoughtful enough to have pulled all your money assuming you have any available from the stock market and throw it into energy or shorting the dollar]

so please... please... I DO NOT WANT A HAND OUT, I DO NOT WANT OTHERS TO GET HAND OUTS [aka : free money from the government]

please ask your congressperson to push on the lenders to do EVERYTHING POSSIBLE to assist people with getting their mortgages refinanced into long term vehicles that will remain affordable.

the entire system is a house of cards, and you are a part of it [assuming you live in the united states]. keep the foundation strong, do what's right for everyone. foreclosures are bad, credit defaults are BAD, free money is BAD.

If the employment picture declines significantly, this is going to go a lot further than just some mortgage defaults and credit defaults. IT NEEDS TO BE STOPPED NOW

[150 Multiple Choice Questions]

Everyone likes to talk about his tan and personal pay. His tan is awful, fun to talk about but not very relevant. And frankly, he built one of the biggest financial institutions in the world, he should make TONS of money. That incentive needs to be there in order for the entrepreneurs to be motivated. His big mistake was going public - both as a company and as a jerk - but who is really shocked that the guy who built this successful a company is... um, passionate.

Countrywide is a scummy company that did some scummy things, but he's not wrong about this. I think with further review you'll find the borrow in this case did some unbelievable things as well.

[150 Multiple Choice Questions]

Ed, can you define "EVERYTHING POSSIBLE"?

It's time for you and everyone else crying to the government to accept that there's basically little to nothing that can be done by anyone. Even a straight bailout would hurt much more than it would help, plus it would hurt EVERYONE, not just those in the housing market -- where many deserve it and most will ride it out having lost their paper wealth and fantasy.

HOUSES ARE WORTH MUCH LESS THAN THEY WERE AND THERE'S LITTLE TO STOP IT UNTIL IT REACHES SUSTAINABLE LEVELS (levels before the stupidity). LETTING THIS HAPPEN IS THE BEST THING FOR EVERYONE. Yes there will be massive job losses in the financial companies and housing related sectors, but that also in unavoidable, natural and correct. This has played out many times before and we've survived... but it seems no one ever learns the lesson.

[TX Dem]

I hope Mr. Beef Jerky Tan never lives this one down with his golfing buddies. I hope he lost his seat at the big boys table in the clubhouse. Only interns and geriatrics are excused from sending an email like that to a company's customer. I am neither -- I'd be fired on the spot if I "accidentally" told one of my customers they were disgusting and so on. Since that will never happen to this fat cat, one can only hope for ridicule from his peers over such an irresponsible thing to do.

[Michelle]

I love how people are quick to judge these borrowers, saying they should have known what they were signing. I can tell you that, if your mortgage broker or lender doesn't point out, in plainspeak, the downside of this loan, you won't know. They'll tell you that it's great because you'll only have to pay "X" and thus have more money in your pocket. They'll fail to explain to you what negative amoritization is and they won't walk you through the worst-case scenario -- which is what is happening to lots of people now.

Give me a break. Asking people to understand loan documents is like asking them to understand the medical terminology before their operation. You depend on your doctors to explain ALL of the risks involved with your operation in a way that you, as a layperson, can understand. You should expect nothing less from your mortgage broker or lender.

[arroyogrande]

Free Loss Mitigation : "none of us are immune from a financial hardship...most of us are only a pay day away from being in default."

If that's true, then why aren't they renting? If your monthly house payments are so high that you can't save for an emergency fund, or are "only a paycheck away from foreclosure", isn't a possibility that the buyer took on more debt than he/she could chew?

I *know* everyone says that times are tough, rents always go up, people don't make enough money to be able to save for emergencies, etc., so they "have to" buy a house to protect themselves from rent increases. However, buying a house that leaves you "one paycheck away from foreclosure" is CLEARLY not the answer.

Free Loss Mitigation : " The savings rate in our country is at a negative and "none of us" have job security."

Look, I also know that wages haven't gone up, and many people are living hand to mouth just to put food on the table. However, most of us have seen the conspicuous consumption that our friends and neighbors have displayed over the past 5 years. The excuses were many: I can't save money, but I think we should go out to dinner tonight. I can't save money, but I'll buy a new car since I can get 100% (or more!) financing. I can't save money, but my friends won't think I'm cool if I don't buy these chrome rims for my car. I can't save money, but I *need* to buy new furniture for my new house, and I hate the kitchen and I *need* it re-done. I can't save money, but working so hard for so little is damaging my psyche, so I *need* to go on this trip to Cancun for my mental health.

I'll bet we ALL know people in BOTH camps...those that can barely get by and truely deserve our help (anyone know of people ravaged by wars, typhoons, or earthquakes recently?), and those that buy what they want NOW because they deserve it, and worry about the consequences later.

Phyllis Harb: "When was the last time you signed a set of loan documents from a lender? They are unbelievably complex; I am in the business and it is difficult for me to understand."

The last time I signed loan documents was in 2003. True, they are complex and full of legalease, but Phyllis, we are talking about borrowing hundreds of thousands of dollars here...in most cases in LA, HALF A MILLION DOLLARS OR MORE. That's a lot of money to be borrowing without even *reading* the loan documents. "No one reads the loan documents" just doesn't cut it when you are borrowing that much money. As an LA Realtor, don't you counsel your clients on what a big and important financial decision they are making, and how they should read and understand everything carefully as it is a BIG financial undertaking? Don't you tell them to not be hasty with signing anything, as the amount they are borrowing is a lot of money? In other words, do you as a Realtor routinely communicate the gravity of the situation, and how it shouldn't be rushed into lightly? If so, then I think you are going a long way into preventing some of this mess from happening again.

- arroyogrande

Compound that with new and inexperienced loan people – it was a recipe for disaster.

Posted by: Phyllis Harb | May 21, 2008 at 09:54 AM

[Henry Pulano]

I recently modified my loan with countrywide using the services of loanmod.com (a MIZNA company). They walked me through the process and helped me achieve great results. I highly recommend them.

[kyle]

"External heat and cold had little influence on Scrooge. No warmth could warm, no wintry weather chill him. No wind that blew was bitterer than he, no falling snow was more intent upon its purpose, no pelting rain less open to entreaty."

-Charles Dickens

[Cal]

It hit Drudge thus the difference in comments.

[jbunniii]

"You depend on your doctors to explain ALL of the risks involved with your operation in a way that you, as a layperson, can understand. You should expect nothing less from your mortgage broker or lender."

Actually, I expect MUCH less from a mortgage broker or lender. A doctor has undergone more than a decade of university-level training and beyond before he is allowed to practice. He must be licensed in order to practice, and must carry malpractice insurance, and will lose his license if he screws up even a handful of times.

In contrast, most mortgage brokers are fiercely uneducated. The barrier to entry into this "profession" is very low, and as we've seen, there is scant oversight or enforcement of what regulations we do have in place. Trusting these people any more than you would a used car salesman is a very unwise idea.

I echo the opinion of others above that borrowers absolutely SHOULD be expected to read and understand the documents, either by examining themselves or, better yet, by paying a lawyer to do it. It might cost what, $2000 or so? That's a drop in the ocean compared to the size of the loan itself, and anyone who can't afford $2000 has no business whatsoever buying a house.

I have long argued that borrowers should be required to demonstrate enough financial literacy to be able to calculate their loan payment using a pen, paper, and calculator, right there in the lender's office. Wrong answer means no loan. This simple step would have completely prevented the ridiculous "crisis" that has affected the entire world's financial system.

[MyLessThanPrimeBeef]

On Tuesday evening, Countrywide issued the following statement: "Countrywide and Mr. Mozilo regret any misunderstanding caused by his inadvertent response to an e-mail by Mr. Bailey. Countrywide is actively working to help borrowers, like Mr. Bailey, keep their homes."

---------------

That is the most disgusting thing about this whole sordid affair - this man's inability to communicate, causing normal, understanding bloggers like us to misunderstand.

I think Mozilo needs to eat more prime beef.

[150 multiple choice questions]

Hey Michelle, if you had cancer would you try to find out everything you could about it? Maybe call a doctor you know and ask them the real deal? Maybe look the info up online.

There are so few things you need to know about loans (rate, duration, resets, points, prepayment penalty, fees, rebates, etc...) that are freely available to ANYONE that anyone who doesn't care or think to figure those things out for themselves deserves what they get. People didn't find out because they were gonna get rich!

No different than getting ripped off buying a car, or a suit or a vacation or anything else.

Why is it that everyone cries foul with homes?

[William Jones]

This argument between a borrower too foolish to understand his loan and a wildly overpaid CEO whose organization is being sued for lax underwriting by some of its investors reminds me of Henry Kissinger's comment on the Iran-Iraq war: "It makes you wish that both sides could lose."

[The Duke of Moral Hazard]

Gina, ok, not Kool Aid, maybe Long Island Iced Teas:

"The US governement pushed lenders to make loans more affordable , monitered and censored lenders"

It's like you're reading from the CWC civil defense manual. Pushed lenders to make loans more affordable? Understand something, and understand it now please -- business wags government, not the other way around. To try to make the country's largest lender look as much the victim as the borrowers... somebody please explain this to her.

[Kathy]

This kind of reminds me of the O.J. Simpson case (okay, I know it's a huge stretch). It was quite possible that the police planted evidence at the residence of a suspect who was guilty. It's not right if they did that, and it doesn't make the suspect any less guilty. If this borrower refinanced or cashed out or whatever, and didn't read the contract but took the word of the salesperson, that's his mistake. Regrettable, but his mistake.

Mozilo is an unsympathetic character, to say the least, and may have committed a criminal offense while piling up his hundreds of millions the last several years. His response to this email is characteristic, and not surprising. He is an overly tan weasel.

p.s. I used to work with a director in Information Technology who couldn't or wouldn't use the email and had his assistant print them out and place them on his desk. He came from a marketing background...

[egad]

I was part of the mortgage meltdown and can honeslty say I saw some disgusting practices by many people from the top down all the way through the crash. yes some people speculated and are loosing out but people must realize that the bank speculated just the same. Do you think they weren't making money had over fist selling neg am loans on the secondary market. Mangers were pushing short term arms to their LO's, encouraging income padding among other things...and no it was not just the brokers...Brick and morter banks encouraged this too.
I came into the industry from a small town banking environment and turned many of people down on stated income loans when the income stated did not work. I refused to tell borrowers that moving out of their 30yr mortgage with only 15 years left to a 2yr ARM was good for them because I could pay off 3 small credit cards. Some lender down the line SOLD them on the great idea though. Banks gave heavy discounts (rate specials) on short term arms and looked to originate at pretty much any cost.
So, great, you got a 30 yr fixed at 4.75 congratualtions you win. but remember that not everyone out there had the know how to fully understand the true financial consequences especially when banks across the US were telling them they could have a 600k home for 1200/mo or save 1000 per mo on their monthly bills even though things were manageable though uncomfortable at the moment.

Banks, just like the borrower, take a risk on a home purchase. Rate mods are the ideal solution where a win win can occur. If they refuse foreclosure is pretty much eminent.

[gina]

Why don't you round up a gang, rob the bank, steal the notes and burn them ? That will get the villian bank manager!

Seriously, a lender's activities are monitered in many ways by both investor, state/federal government agencies in the form of random and specific audits. We follow their guidelines in the origination process. If there are signiicant findings, the company will lose their lending ability.

This credit crisis is everyone''s fault.. lenders, borrowers, sellers, appraisers, title companies, attorneys, investors...pest control... Need I go on?

Everyone was happy and making money... I just think CFC is taking the full blame because we were the biggest out there. Wells Fargo, B of A, Wamu are not exempt from high foreclosure rates.

When things get tough, the tough get going..,.,Food and shelter are the most important things. Pay your mortgage before the cellphone bill. Make dinner at home instead of take out, read a book, get rid of cable. SO much money wasted!

[bflaska]

nobody but me seems to think the mortgage crisis was engineered by organized goons like arrogant criminal mozilo (who should be wearing different sorts of stripes right now and begging for internet privilege from a high security hard work prison). no, no -- the mortgage companies SOLD the dream, then lied, connived, and colluded with developers and banks and then bailed. they should by rights be stripped of their unlawful excessive and most individual profits and set to work making pebbles out of big ones in the hot sun.
or worse.

[Scott Johnson]

Dont buy more house than you can afford you deadbeats. Stop blaming other people for your multiple credit cards and poor money managment. Pay your bills you bums. You wanted more house than you could afford, so you used crazy ARMS to do it instead of putting 20% down and paying a tiny bit higher rate. Live with your poor choices and grow up, stop pretending you didnt know what you were doing. Why didnt you consult a lawyer and read all the forms very carefully like I did? Too lazy? Well, just like the grasshopper who sang all summer, dont aske me for food in the winter you lousy bums. I hate all these whiney comments from you spoiled lazy bums. Stop blaming countrywide for your problems. I'm sick of you lousy whiners who drive better cars then me, have bigger houses than me and make Less than me! You gambled on the never ending rise in real estate and lost. Now MY house went down in value, but I dont have to sell it, I own 50% after 4 years, because I bought smart and frugally, and I done waste money and charge up my credit cards. Maybe 1% of all the people complaining are real hardship cases. The rest are greedy people who live higher than what they earn.

[Jenna]

If people want to get away with the "but I didn't understand" song and dance, their right to contract should be revoked from here on out. Just like we don't let minors enter into a contract, we should not allow people that can't read and understand contracts, to enter into a contract.

[Fortune at your Feet]

So... let me get this straight.

Borrower takes out loan. Signs papers. Spends the money. No complaints....

Now comes the time to pay it back... with interest... as agreed.... but the money is long gone so he suddenly "didn't understand" the loan terms ... and this should get him out of repaying...???

And you people think the BANK is the only bad guy here?

Don't get me wrong, the banks were stupid with their underwriting, anyone could have seen this coming. They deserve to take all the losses they are currently being hit with. But why shouldn't the people who SPENT THE MONEY (and it really doesn't matter WHAT they spent it on) they borrowed PAY IT BACK AS AGREED? Its a very simple concept, but shockingly hard for some people to accept.

If all of us started reneging on our agreements and responsibilities because we didn't feel like it, what would THAT do to society?

And alot of people do have the money to make payments, they just want to have their cake and eat it too. They want the benefits of having taken the money from the bank to spend on _______ (fill in the blank with house, car, vacations, bills, whatever), and some even have some of that refi money from last year stashed safely away in a relative's account so they don't have to show it to the bank, etc.. They want to keep the stuff they bought. But they don't want to pay back all of the money they borrowed...??? But they also want to keep the house.... ??? Well, guess what??? Life isn't like that. You can't just HAVE IT ALL at someone else's expense. That kind of thing is considered stealing in some cultures.

And every person here who's heart bleeds for people in trouble, if you're so sympathetic then you can start making their house payments for them... because as sad as their situation may be, I for one am not going to do it by paying more taxes to bail them out. I worked two jobs for 10 years, and have the carpal tunnel syndrome to prove it. We've got two kids and we are currently saving for college. We pay a mortgage, and gas is headed to $5 a gallon. We bought our cars used, ate in, and saved for years to buy a house on a 30-year fixed while others were buying SUV's and taking vacations with the bank's money.

I know alot of people who live as we do and this current insanity about bailing people out of their financial messes is the craziest thing I have ever heard. If you really want to help people in need, donate to worthy causes like we do. But anyone who talks about bailing these people out had better be the first to take out his or her wallet, and put their money where their mouth is.

Only in Bush's America is such behavior rewarded, and it has got to stop. What kind of society do you want?

[The Duke of Moral Hazard]

Tom Petruno has an interesting blurb on Moody's on his money blog next door. See, Moody's stock has just plummeted because it's been noticed that they've knowingly kept ratings up -- those shining AAA's that kept the mortgage backed securities hopping as well -- even when they shoulda been down down down. He reminds us that Berkshire Hathaway is the majority shareholder in Moody's.

Oracle of Omaha... well it's easy to be an oracle when you're Warren... more and more it appears he produces the events that he profits from. This ain't luck and conservative "value" investing... this is a con on global scale. Angelo should have been taking notes.

[Gregory H]

It's not just the distressed customers that Countrywide is turning it's back on. I am not in a variable rate mortgage and have no credit issues whatsoever but Countrywide is shutting my HELOC down. I don't use it for anywhere near what it's limit is but I do use it on occassion not to mention that I like having it on my credit/imcome ratio but they've closed it out altogether. There's no way these people reviewed my account on an individual basis and derived at this decision. They're just wrapping us all up into one blanket decision.

[D. Clark]

It's easy to say 'disgusting' when you have an income in the millions. Didn't Countrywide lose over a billion dollars? This guy should thrown out on his @ss.

I wonder if he will receive the same kind of mercy when he stands before God.

[REO Guru]

There's plenty of blame to go around. It was easy money, put into a home that would appreciate by double digits every year. There was no end to this party. Everyone got so confident that prices would never go down that underwriters started to look the other way, everyone wanted to make an easy buck. But the music stopped and those that arrived late at the party were left holding the bag. Now they want a bail out. One thing nobody talks about is the various branches Countrywide (as well as other lenders) had to close because of fraudulent lending practices. I know of at least two very large offices (Diamond Bar and El Cajon) in Southern California that were closed for this reason. These offices had "art" departments where phony accountant letters were drawn, customer signatures would be lifted from one document and Photoshopped to another. These offices were pulling in heavy profits for Countrywide. Mozilo's acidic response is just a glimpse into the personality that pressured the company into unrealistic production quotas which resulted in the enormous amount of fraud committed. His humble demeanor at the Congressional hearings was just an act to get out from running the risk of having to pay back the stock profits he gained through insider knowledge. I have no sympathy for him or the people who didn't know what kind of loan they were getting into, no sympathy for the unemployed loan agent, or for the hundreds of now defunct mortgage companies that made their millions during these past few years. The only ones that should benefit from a bail out is that small minority out there that actually suffered from having a fraudulent loan given to them.

[Uncle Billy Climbs Mont Pelerin]

REO Guru writes: "These offices had "art" departments"

I don't doubt it, but where's the evidence? I wonder if Countrywide absorbed Ameriquest people when *their* art departments got shut down. The thing is that Angelo is not going to end up as Ambassador to the pumpkin festival -- he's probably going to open up his own Michael Milkenesque foundation.

"Whocouldanode" and "wheeeeeeeeeee"

[DB]

The situation is very clear. Once you are of legal age (and of sound mind) you have the right, but not the obligation, to enter into binding contracts. Whether those contracts are beneficial or non-beneficial to you is strictly dependent on your desire, willingness and ability to obtain all relevant information and to negotiate to your advantage. The other party to the contract is only obligated to negotiate in its own self-interest, just as you negotiate in your self-interest. It is their legal and moral (since they are working in their own self interest) right to get you to agree to something that is not in your best interest but favors them. Conversely it is your right to negotiate an agreement that favors yourself to their disadvantage. In the event of an intermediary or advisor, they are obligated to their client, whichever party that may be according to the legal agreements (usually the one that is paying them), to use their best efforts to obtain the most advantageous agreement for their client. In the event of fraud or negligence, by either party, then you have the right to sue the other party for damages (and possibly establish criminal liability by the other party).

Thus was born the concept Caveat Emptor (Let The Buyer Beware!).

[Ragnar]

"The thing is that Angelo is not going to end up as Ambassador to the pumpkin festival"

Posted by: Uncle Billy Climbs Mont Pelerin | May 22, 2008 at 10:38 AM

LOL! That woud be pure awesomeness! Great imagery!

[Tom]

So the dude's been in the house for 16 years and he took out a 1 year ARM loan against the property and now he can't afford the payments? Sounds to me like he cashed out his house like the rest of the clowns. I wonder what he spent the money on?

Sorry, I have to side with The Orange Man on this one.

[minty@miamidade.gov]

I feel really sorry for Mozillo. I have a reverse amortization loan with Countrywide. This means that Countrywide has spent more on attorney's fees than my home is worth. This means that I supposedly owe $50,000.00 more on a $100,000 mortgage than when I got the loan. They started this crap with me in 2004, no, make that 2002 when they added $10,000 in unexplained fees to a loan mod. Then they lost insurance checks they were supposed to endorse. Countrywide has the accounting accumen of a monkey. No, that is insulting a monkey. A doorknob knows more about addition and subtraction than Countrywide does. No Mr. Mozilo it is not a conspiracy you and your little bunch of thieves are that bad. Worse still is you want to bring this country down with you. This is not bad like in badass, this is bad like in incompetent. This is bad like is ripping off your customer. This is bad like stealing candy from babies bad or bad like in stealing wheelchairs from old ladies bad. Bad like in morally bad. But let me tell you how I really feel. Give me a call sometime, we can chat.

[PCL]

I suspect that this was the luckiest day in Daniel Bailley's life. After being exposed as the insincere parasite that he is, Mozilo would be a fool to let this story die without a happy ending. After that, he can get back to salvaging what's left of tawdry racket he's been paid so handsomely to assemble. It's hard to tell from Mr. Bailley's vaguely worded letter if he was truly a victim of circumstance, a sucker, or just a run-of-the-mill scumbag, but whatever his story, for a worm like Mozilo to be lecturing him would be analogous to the pot calling the kettle black (or maybe just a very strange shade of tan ;-) ).

[dls]

to all the people who "know it all," but have no idea what is going on, let me offer, #!, it behooves CW to work with people. They dont OWE anybody anything, but everyone can stand by and keep watching the economy go in the toilet unless they work with people. and, as far as all the people you assume are wreckless and foolhardy, sometimes life happens, and when it does, there are usually measures in place to help out. it's a win win if that happens. CW doesnt want everyone's houses. we all want the same thing, financial stability. you can kick gagillions of people out of their homes, i reckon, now where would that get everyone? i am one of those wreckless idiots you speak of who took another job just after buying my home. the new company did not have the work they promised and i then went to another and yet another company and have finally found one. i was approved for a loan modification and i have since received 3 letters asking for a signature i sent 3 months ago. i cannot make a payment because nobody i call knows how to tell me to make one since they arent really sure what they've done to my loan, i get "you're approved to refinance" letters right alongside foreclosure ones. i call and call and call, and can only get in touch with a rep in india who does not have a good picture of what is going on. nobody will return my calls. it's a flipping nightmare. sending a letter off to dozens of email addresses is because people have been banging their head on a very thick brick wall. so, for all of you who opine about something you have no experience at, my suggestion would be to listen and learn instead of engaging thy mouth.

[kurt]

I love this, all the people who complain without knowing the facts.

It could be medical bills w/o ins. It could be suvs and vacations. who knows? If the guy blew his equity on junk shame on him, it looks like he will pay the price. If is was medical bills or the like I hope it never happens to you.

To the lenders who "rip off" clients......It will all come out in discovery (yes i am a lawyer) and you will pay. This is how I MAKE MY MONEY so pay you will.

To all the borrowers who used a home as an ATM, if you play you pay.

To the owners who are without guilt i am sorry for you problems, but do not fear, many things are more important than the "status" of homeowner.

[JMKC]

I sure hope Mozilo enjoys his prison cell.

[Great Rate Folks]

Good day:

Just wanted to chime in with my two cents, even though I do not have all the facts, these days, it seems an American Institution to speak long and hard without having any of the facts, much less all of them.

First, CountryWide and Mozilo are paying a heavy price already, albeit Mozilo's is cushioned by his two hundred MILLION dollar windfall/salary/stock option sale. Most of us do not have that kind of pillow.

Second, we should all feel bad this guy is losing his home (NOT LOOSING, good lord, did you folks skip 3 rd grade?), even if he is 100% at fault, no one should find joy in that.

Third, the loan process and disclosure process is unbelievably dumbed down. In fact, most important things are disclosed two times, one for Federal standards, another for your State. Sorry, I do not buy the fact folks did not understand a simple ARM. Now those Pick a Pays...sheesh, it was MONTHS before I really understood them, and they were a VERY GOOD TOOL. but like ANY tool, if you use it for the wrong job, you may get hurt. Just like if you try to change a tire on your car using a JACKHAMMER, wrong tool, you will be HURT. I know many folks that used that tool properly, and came out smelling like a rose.

Fourth, money became too readily available, and the start of that was MOODY's, the rating service. After the first few months of the CDO's, everything going smoothly etc, they just stamped them AAA without EVER looking to see what the underlying mortgages looked like. I have a little movie in my head of guys with green shades over their eyes and garters on their sleeves saying, average interest rate is 8.25, average LTV is 95? I wish we had AAAAAAA ratings! It was a rubber stamp operation, and for a long while, the house of cards stood!!! By my guestimate, at least two and maybe three years.

Fifth, yes, finally I will blame the lenders...they dream up the loan programs, and they got progressively looser (see the difference third grade skippers) in their guidelines. At one point in the process, about two years ago, a Mtg broker could deliver a FNMA 30 year fixed for a ONE point fee, proving income and assets. Yet the SAME loan in a Pick a PAY, no income verif or asset verif gave the broker 3.5 points, and you could go to 90 % LTV, not 80.

Sixth, So many congressman and state reps and even consumers have been trying to blame the mortgage brokers. But for the most part, brokers were not the problem. Brokers do not design the programs, they do not set the pricing and the fees paid. Brokers are issued guidelines, if they have a client that FITS the guidelines, the lenders make the loan. ( now if there was fraud involved, then the broker would be at fault ). REMEMBER though, the money got so easy to get, some programs only required the borrower have a PULSE to get 95% of the value. Allow a digression here...how is it that members of congress get paid 150K a year, and within 5 or so years of being in the House or Senate, they are miraculously MILLIONAIRES?

Seventh, now we have the value issue. I remember shaking my head 4 years ago, wondering how folks were AFFORDING these homes, and I also recall some of the strangest contracts ever, escalation clauses...REALTORS certainly had a LOT to do with this crisis. I will buy this house for 15K more than any other contract...it was just like the tulip craze.
I think it was Joe Bsfk from the cartoon that said, "We have seen the enemy, and he is US."

Simply put, greed, engorged on a mob psychology of buy buy buy, with folks dropping the ball at almost every level, or worse, commiting fraud...mixed with a negative savings rate, a service economy that eschewed the manufacturing base that made this country great, a willingness to live WELL beyond our means, the Eurodollar, Sinodollar, Petrodollar, the FIAT dollar, balance of payments deficit (DID I mention the ILLUMINATI? LOL)...dollar down 30% in one year....

How long do you think anyone in the world will want to keep holding all those dollars? If those dollars come back to us too fast, it ALL goes down the tubes, and this will seem like a vacation at the beach. Even 1929 will be dwarfed. Honor your contracts, pay your bills, do not go gentle into that dark night. Do not blame others. Look who just bailed out Merrill Lynch, as they discounted over 30 Billion in CDO's: "The $8.5 billion fund-raising efforts will include Singapore sovereign wealth fund Temasek Holdings investing an additional $900 million into Merrill Lynch."
Thirty Billion turns to 8 Billion. How many more times is this to be repeated before our dollar is worth nothing, and our companies are controlled by foreign interests?

One comment above made it clear to me in a simple way...something like "I was trying to work with a Countrywide agent in India, but he did not have the WHOLE picture." I know about outsourcing, I know about economies of scale...this IS WAY BEYOND BUSH and believe me, Obama is even worse.

I hope you got my two cents worth!