Countrywide announced today that it would attempt to contact up to 82,000 borrowers who are either facing a rate reset on their Adjustable Rate Mortgage before the end of 2008, or have recently experienced a rate reset and are having difficulty staying current on their payments.
I’ve been reading many of the commentary on different websites recently and have seen an overwhelming mindset of “Why the heck is anybody helping these people. The majority of them lied on their loan application in order to qualify for the loan anyway. You reap what you sow!” On some level I might agree with that. I’m a big believer in Karma. On the other hand, anything that can be done to help the struggling real estate market right itself would be welcomed as far as I’m concerned. And from what I can see this is going to help. Albeit this will help only a small percentage of the overall troubled homeowners, but any amount of help is help nonetheless.
Hopefully other lenders will follow suit and put together a plan to help it’s most troubled borrowers avoid foreclosure.
Click Here to read the full article from MSNBC.com
-Steve Nicks
Technorati Tags: Countrywide Home Loans, Adjustable Rate Mortgages, Desert Ridge
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October 23, 2007 at 2:02 pm
Chris Butterworth
That sounds like good news - lower payments means less defaults, which means fewer displaced families, fewer families needing rentals (keeps rent rates in check), and fewer bank-owned properties on the resale market (helps to keep prices from free-falling.) Good for Countrywide.
That said, I don’t think this is being done from the goodness of Countrywide’s heart. I haven’t done any math to support this, but they probably feel that keeping someone in their home at 7% is more profitable than raising their rate to 8.5% and then getting the home back 6 months later, where they’ll lose tens of thousands of dollars when they re-sell it…
So maybe this is a win-win, where Countrywide will make more money long-term by helping consumers in the short term…? What a novel idea!
October 23, 2007 at 9:01 pm
Steve Nicks
Whatever the motivation, you’re exactly right. The less bank-owned homes on the resale market, the better. From what we’ve seen in the past couple of weeks, it’s going to be the bank-owned properties that drive values down. A typical homeowner trying to sell his/her home properly advised will most likely attempt to keep the home priced just below market value. The bank, however, come in at sometimes hundreds of thousands of dollars below market value looking to unload the property immediately. The typical homeowner just doesn’t have it in them to compete with that in most cases.