Last night I wrote about the investigation that Angelo Mozilo at CW is undergoing for purported SEC violations. I said that I really admire Angelo for his creative, cutting edge approach, but that he now is under the scrutiny of the SEC. If something bad happens, then the house of cards in the mortgage industry will collapse and that the government will be all over everyone in real estate like flies on ____.
Further, in today's paper, THE USA TODAY, specifically, the cover story in the money section supports this theory. "Criticism Rains Down on Mortgage Industry" is a prime example of the mess that's been created by our industry.
However, on page one of the USA TODAY, the headline story next to the california wildfires is "LENDER TO REDO $16B IN LOANS". Countrywide, recognizing their contribution to the sub-prime fallout, his redoing 16 billion in loans that are in or near foreclosure, provided they are:
1) In default due to a rate adjust because of their sub-prime countrywide loan;
2) Are likely to have difficulty affording an upcoming rate increase and are unable to refinance, or;
3) Had subprime credit buy have been making payments on time.
It'll be interesting to see the fallout on this who thing. First can CW remain viable and strong by being this agressive with people on the brink of BK? But they can't afford having these people going into foreclosure either. I doubt that this will take the heat off of Mozillo, but it should pull congress back for a bit to let them take a watch and see approach.
In the meantime, lets see what happens. Kudos to CW for not just recognizing that a problem exists, but for taking action steps to alleviate those issues.
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