Personal Finance Blog by Debit versus Credit

Let’s Talk About The Late Countrywide

July 24, 2008 | Filed in: Miscellaneous | No comment

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If you own a home, pay attention to any of the business and financial news or have ever owned a home you probably know who Countrywide is.  They are of course “America’s number one home loan lender and no one can do what Countrywide can.”  Well Countrywide is no more as they’ve been purchased by Bank of America.  It’s the end of an era.  An era defined by the run-up in house prices and subsequently the decline of the U.S. housing market.  There are a million reasons why Countrywide might be to blame for some of this housing crisis we’re facing and probably a million more why they are not at fault.  The fact of the matter is that we are in a recession (so to speak) and that housing is the primary cause of said recession.  So what’s Countrywide have to do with it?

Charged With Lying To The People

Countrywide (and now BofA by extension) is essentially being blamed for lying to the people and being unethical in their lending practices.  Here are a few of the arguments against them, according to a recently filed lawsuit by California Attorney General Jerry Brown

• Beginning in 2004 company executives loosened and possibly ignored lending standards and flattered home buyers into thinking that they could afford more house by offering low teaser rates not clearly defined.
• Applied intense sales pressure for underwriters to process “60 to 70 loans per day” which made it all but impossible for them to take into consideration the borrowers ability to repay the loan.
• Loan officers frequently overstated how much borrowers earned or “led the borrower into overstating is or her income without explaining the risk of default with a loan he or she could not actually afford.”

It’s obvious there were some shady practices going on at Countrywide over the last several years.  The real question is how much has it really hurt the market?  Do you have a Countrywide loan?  I want to hear from anyone who has one and especially any one who has been hurt by an adjustable rate loan sponsored by Countrywide.

Tags: countrywide, housing bust, housing market