Posted on 04/29/2008 5:18:59 PM PDT by BurbankKarl
Countrywide Financial Corp. reported an $893 million loss for the first quarter, amid mounting evidence of serious problems with its underwriting of many home loans.
A federal probe of Countrywide, the nation's largest mortgage lender, is turning up evidence that sales executives at the company deliberately overlooked inflated income figures for many borrowers, people with knowledge of the investigation say.
Some of the problems are surfacing in a mortgage program called "Fast and Easy," in which borrowers were asked to provide little or no documentation of their finances, according to these people and to former Countrywide employees. Both Countrywide and Fannie Mae, the government-sponsored company that bought many of the loans, classify the loans as "prime," meaning low-risk.
Fast and Easy borrowers aren't required to produce pay stubs or tax forms to substantiate their claimed earnings. In many cases, Countrywide didn't even require loan officers to verify employment, according to an October 2006 presentation by Countrywide's consumer-lending division. That left the program vulnerable to abuse by Countrywide loan officers and outside mortgage brokers seeking loans for customers who might have been turned away if their finances had been more closely scrutinized, according to three current and former Countrywide senior executives and to several mortgage brokers who arranged loans through the program.
(Excerpt) Read more at online.wsj.com ...
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
Sucker!
(me, too.)
Lets see now , the borrower knew they were submitting false info , the lender knew the info was false , the secondary mortgage market buyer knew these were questionable loans the original lender would not guaranty with recourse and so made a business judgment to knowingly buy the paper at a discount; so who is at fault ? George Bush and the tax payers .
Wow. Couldn't ask for a timelier exclamation point to this post.
Lets see: loans went bad, lets assume foreclosure, 100% financing:
Did the house evaporate or does it still exist? There is still a home with the mortgage so there is a residual value somewhere. It may have lost value from it original purchase price which is value that only existed during the “market” highs.
If they have 100% financing, what is the PMI picking up? Private Mortgage Isurance is required for these circumstances in order to get the loan. It is on 20% of the homes value so home prices would have to drop over 20% across the entire contry for loses not to be covered in some fashion. That did not happen.
I think these articles are BS made to exaggerate the problem and get funding for the banks/speculators.
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