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03-16-2008, 08:43 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: New Orleans
Posts: 47,500
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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.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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03-16-2008, 10:33 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,303
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Quote:
Originally Posted by Want2retire
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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Always the greatest insult when these things happen...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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03-16-2008, 11:27 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,186
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Quote:
Originally Posted by Want2retire
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).
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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 wasn't born blue blood. I was born blue-collar." John Wort Hannam
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03-16-2008, 11:36 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2007
Posts: 5,072
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Quote:
Originally Posted by youbet
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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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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03-16-2008, 11:38 AM
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#6
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Thinks s/he gets paid by the post
Join Date: Aug 2006
Posts: 2,433
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Quote:
Originally Posted by youbet
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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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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03-16-2008, 11:55 AM
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#7
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Administrator
Join Date: Apr 2006
Posts: 23,038
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Quote:
Originally Posted by youbet
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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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.
__________________
Living an analog life in the Digital Age.
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03-16-2008, 12:00 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by Gumby
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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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.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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