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Is He Public Enemy #1?
Old 03-16-2008, 07:13 AM   #1
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Is He Public Enemy #1?

Or is he just suffering unfair abuse at the hands of an ungrateful public and government?

Is he the next Dennis Kozlowski, Bernie Ebbers, or Ken Lay? What is your opinion?

Companies are reportedly under investigation... looking for fraud.

Countrywide Fights Federal Probe [CFC] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news ....
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Old 03-16-2008, 09:43 AM   #2
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Well, let's see - - I will proceed to pontificate upon Countrywide for a moment.

In 2002 I e-mailed Frank that I was shopping for a mortgage, and Frank instantly urged me with great alarm to avoid Countrywide. His reasons? Their questionable business practices and his certainty that they were planning to go under, pocket the profit, and leave homeowners holding the bag. Well, it didn't quite pan out that way but my point is that some people saw potentially huge problems in their business practices even six years ago.

(Personally, I took his advice and got a 30-year fixed mortgage at 6.375% from Chase even though Countrywide was offering 6.25% that week).

My question is why did they not have government looking over their shoulders and breathing down their necks at that time? How were they allowed to continue and get into a mess like this? If anything illegal was done, it should have been rooted out six years ago. If anything illegal was not done, maybe more regulation is in order.

As an aside, if CEO's bore personal liability for these financial disasters instead of walking away with tens of millions in yearly bonuses, I think fewer such disasters would happen.
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Old 03-16-2008, 11:33 AM   #3
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As an aside, if CEO's bore personal liability for these financial disasters instead of walking away with tens of millions in yearly bonuses, I think fewer such disasters would happen.
Always the greatest insult when these things happen...
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Old 03-16-2008, 12:27 PM   #4
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they were planning to go under, pocket the profit, and leave homeowners holding the bag. Well, it didn't quite pan out that way but my point is that some people saw potentially huge problems in their business practices even six years ago.

(Personally, I took his advice and got a 30-year fixed mortgage at 6.375% from Chase even though Countrywide was offering 6.25% that week).
Maybe you or one of the other contributors can help me understand.......

What would have happened to you if you had gone with a Countrywide mortgage at the lower rate (everything else the same) and Countrywide had gone belly-up, "pocketed the profits and left the homeowners holding the bag?"

I'd always thought that perhaps this could lead to some paperwork hassle but that you'd just wind up owing someone else the same amount under the same terms. Is this not true?
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Old 03-16-2008, 12:36 PM   #5
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Maybe you or one of the other contributors can help me understand.......

What would have happened to you if you had gone with a Countrywide mortgage at the lower rate (everything else the same) and Countrywide had gone belly-up, "pocketed the profits and left the homeowners holding the bag?"

I'd always thought that perhaps this could lead to some paperwork hassle but that you'd just wind up owing someone else the same amount under the same terms. Is this not true?
I would think that countrywide would be purchased by another bank or possibly split up and purchased by several companies.

I would not thing the person holding the loan would do anything... except perhaps send the payment to another bank.
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Old 03-16-2008, 12:38 PM   #6
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Maybe you or one of the other contributors can help me understand.......

What would have happened to you if you had gone with a Countrywide mortgage at the lower rate (everything else the same) and Countrywide had gone belly-up, "pocketed the profits and left the homeowners holding the bag?"

I'd always thought that perhaps this could lead to some paperwork hassle but that you'd just wind up owing someone else the same amount under the same terms. Is this not true?
This is exactly the way I see it, too. So long as Countrywide showed up at the closing with the funds, whatever happened down the road would not affect me. I would simply go on making monthly payments on my 6.25% loan.
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Old 03-16-2008, 12:55 PM   #7
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Maybe you or one of the other contributors can help me understand.......

What would have happened to you if you had gone with a Countrywide mortgage at the lower rate (everything else the same) and Countrywide had gone belly-up, "pocketed the profits and left the homeowners holding the bag?"

I'd always thought that perhaps this could lead to some paperwork hassle but that you'd just wind up owing someone else the same amount under the same terms. Is this not true?
Countrywide never actually held the mortgage loans that they made. Rather, they packaged them together and securitized them. The home owners still owe the money, but generally not to Countrywide (although Countrywide may still be the servicer). If anyone is left holding the bag, it is the investors who bought the mortgage backed securities, not the borrowers.
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Old 03-16-2008, 01:00 PM   #8
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Countrywide never actually held the mortgage loans that they made. Rather, they packaged them together and securitized them. The home owners still owe the money, but generally not to Countrywide (although Countrywide may still be the servicer). If anyone is left holding the bag, it is the investors who bought the mortgage backed securities, not the borrowers.
Right. I've also had banks and credit unions who actually did service most of their own mortgages (and not sell them to investors). Funny thing...they tended to be a lot more conservative in their lending practices and they aren't going under. Imagine that.
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