The Countrywide Bailout Explained
Posted June 13th, 2008 at 11:07am in Enterprise and Free Markets 
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We have been calling Sen. Chris Dodd’s (D-CT) housing bailout bill “The Wall Street Bailout Enhancement Act” for over a month now. In particular, we have singled out Countrywide Financial as the bank with most to gain from the federal government’s generosity. Countrywide is the largest loan servicer in the nation. It has been accused by bankruptcy judges of using dubious tactics to issue mortgages to unqualified borrowers, and has been at the center of the nation’s still-unfolding mortgage crisis. In the last three quarters, Countrywide has lost $2.5 billion, and has $6 billion in nonperforming assets.
Now Portfolio.com reports:
Senator[] Christopher Dodd, Democrat from Connecticut and chairman of the Banking Committee … refinanced properties through Countrywide’s “V.I.P.” program in 2003 and 2004, according to company documents and emails and a former employee familiar with the loans.
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According to company documents and emails, the V.I.P.’s received better deals than those available to ordinary borrowers. … Senator Dodd received two loans in 2003 through Countrywide’s V.I.P. program. He borrowed $506,000 to refinance his Washington townhouse, and $275,042 to refinance a home in East Haddam, Connecticut. Countrywide waived three-eighths of a point, or about $2,000, on the first loan, and one-fourth of a point, about $700, on the second, according to internal documents. Both loans were for 30 years, with the first five years at a fixed rate.
The interest rate on the loans, originally pegged at 4.875%, was reduced to 4.25% on the Washington home and 4.5% on the Connecticut property by the time the loans were funded. The lower rates save the senator about $58,000 on his Washington residence over the life of the loan, and $17,000 on the Connecticut home. The former employee says the float-downs were free. Senator Dodd’s wife, Jackie Clegg, said in a brief interview that two other lenders they checked with offered comparable interest rates. The senator’s office said Thursday afternoon that it is preparing a response.
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2 Responses to “The Countrywide Bailout Explained”
Anne of Michigan on June 13th, 2008 at 11:07am said:
Most recently I contacted Countrywide to restructure my loan. My current loan with them is not late and I have been an excellent customer with them for over 5 years. Recently, my son passed away, my company went into receivership and my brother was transferred out of state (we shared the home and its expenses). Countrywide informed me that the only option I have is to apply for a 2 month deferment of my regular mortgage payment and I would have 90 days from today to make up those two payments plus late fees plus penalties plus special assessment fees. If, within 90 days, I was unable to pay the entire amount in full my account would be sent for an accelerated foreclosure (45 day foreclosure). There was no other option available for me. I wonder, if I were Senator Dodd, would Countrywide restructure my loan at a lower interest rate? Would I be facing foreclosure? I have owned this home for 25 years that is longer than Countrywide has been in business. My current account is not late, but if I don’t sign this deferment deal with Countrywide will they take my home in 45 days as they have threatened? It must be nice to be a VIP.
Facing Foreclosure
LBJ St. Louis on June 13th, 2008 at 11:07am said:
The same thing that made this Country rich and powerful will be the same thing that destroys it, The profit motive. It’s not out of kindness that the butchers or bakers provides fresh meats or donuts to you and I. They do it because they get paid to do it.
Chrysler, US Steel, Toy Manufactures, HP, Sony, Wall Mart, Dave and Busters, Harvard, Hospitals, the list is endless. They provide you and I with goods and services for one reason only, Profit… So what makes you thing this large government protected bank would be any different? We may have won the revolution, but we’re slowly but surely losing the middle class war. Ann of Michigan, look up the name Rothchild. It probable won’t help your mortgage situation, but a least you’ll know who controls most of the banks in this Country, including Country wide. Oh, and by the way, The Rothchilds like PROFITS…