A survey out this morning says that Mortgage Brokers (and loan officers) are avoiding subprime loan originations.  That's too bad, because the need will not dry up and blow away, even if the product is in short supply. 

What the subprime mess needs is Originators who look out more for the interest of the Client than for their own back pocket. 

It's called ethics.  If your parents taught it to you, you don't have to ask yourself the question "Gee, is this ethical?" 

Countrywide's stock fell to a 52 week low this past week.  A client this morning came in holding a solicitation from CW to refinance his Pay Option Adjustable Rate Mortgage.  There's an $11,000 hard prepayment penalty which will evaporate in just a few months if he doesn't refinance or sell before then.  But the mail piece scared him into thinking that maybe he should do just that. 

Countrywide won't forgive the pre-payment penalty (PPP), and I don't think they should forgive it.  The borrower has a contract, after all.  It's called a mortgage.  The bank made promises, and so did its borrower. 

But the solicitation spelled out potential doom in the form of a worst case scenario that can NEVER happen, given the time frame of his PPP.  The solicitation seems specifically designed to scare the client into refinancing the entire loan AND the prepayment penalty. 

We ran the numbers.  He calmed down, and no--he won't refinance.  It's not in his best interest. 

I have an idea why Countrywide took a charge of $417 million for last quarter... 

And that's the real estate opinion of this Tucson, Arizona mortgage lender,

Mike in Tucson