Bigelow says 92% of all new Countrywide loans are funded by its own bank, that the number of subprime loans its selling has plummeted 98% in a year, from $3.2 billion to $42 million (with an "m"). On the upside, fewer people are prepaying their loans, which means more money for Countrywide, and it is making more money on late fees. Their primary strategy now is to grow deposits in their bank, and they plan to have nearly 200 financial centers open by the end of the year (up from 165 now).
Meantime, the company is touting its Visa card which, kinda like frequent flier miles, lets you earn a point for each dollar charged. After earning 2,500 points, you earn $50 toward the principal balance of any Countrywide mortgage. They're pushing the credit card as a gift. "Give them what they really want this year: a smaller mortgage."
To the list of questions Sen. Schumer sent Countrywide's CEO, which I blogged about last Wednesday, some of your responses--please note that I cannot confirm these claims, but the emails I post are not the only ones making them:
From Marie B., who says she has been in the mortgage business for 28 years, 14 as an escrow officer: |
"CFC had a NASTY habit of selling loans to Borrowers for -0- cost. The catch? The Loan Officer would sell the loan at a much higher rate (telling the Borrower that was the going rate, which was a lie) AND there would be a prepayment penalty if the Borrower wanted that rate. Hook line and sinker, the Borrowers took it, pounding their chests that they got a -0- cost loan! Well, the loan DID cost them, but they were suckered into the loan at a higher rate and a bogus reason for a PrePay. The Loan Officer would make a FORTUNE...
A few years back, I stopped doing business with Countrywide because they were funding loans before the 3 day right to cancel was up...The final straw was when they funded a loan WITHOUT signed documents. I told them that I will NOT be party to it and they called my boss and my boss actually scolded me for not being more respectable to such a highly valued client."
From Bo T., who says mortgage brokers are getting a bad rap:
"Mortgage brokerage businesses play a vital role in the lending industry for the consumers. Not only do we shop the loan to assure that the client is getting the best rate around but in addition we provide jobs for the economy as well as the whole trickle down effect in spending from advertising to office supplies.
I think it is not only misguided but completely unfair for the Senator or anyone else to assume that it is mortgage brokers who have facilitated or even played a role in this entire mess. We were basically pawns in a much larger game...a lot if not most of the responsibility for the financial crises we are all now in lies ultimately with the consumer. While mortgage brokers indeed do make a commission on loans that we originate, the last time I checked the consumer ultimately had the power to say no..."
From Jon C:
"The answers to almost ALL of the Senator's questions are publicly available. This level of ignorance should be unacceptable for members of congress. It is a crime to see someone in charge of legislation demonstrate this level of incapacity. Maybe the Senator should be the one answering 10 questions."
From Ralph P:
"Don't forget that Congress berated the banks and mortgage lenders for not doing enough lending to the lower credit quality applicants - especially minorities. Why isn't Congress defending the lax rules that they encouraged?"
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