MSN Money had an interesting and relevent article today speculating on how Bank of America will handle the buy-out of Countrywide. Click here to read the article.
I'd like to focus on a few key points that were made in the article:
- First off, the relationship between BOA & Countrywide is not new, it's been going on for 40 years. In my mind, this should give you some perspective on whether it was an intelligent decision on BOA's part and the fact that this news wasn't a 'shocker' to a lot of us in the Mortgage Profession. There is familiarity between the two firms and I believe this decision is an example of the Industry starting continuing to cure itself of the ills that came down on it and within it.
- Countrywide is said to have a heck of a lot of liquidity and the rumors of bankruptcy were probably off the mark. Then again, they were sure itching for something like this because something had to be done.
- Bank of America has said that it will be more selective in acquiring Mortgages issued by other banks or independent brokers. This, in my estimation, is HUGE! This should of been done all along and was probably a major component of the problems that went down with Countrywide. Being a Mortgage Broker myself, we have always run loans through their system, got the approval, packaged it up and sent it on its way. Our files were clean and performed well. I wasn't concentrating too much on what other Mortgage Brokers were doing, didn't have to at the time. Then, the whole Sub-Prime Market started taking a plunge and we began experiencing an awful lag-time once our files were submitted. I found out the reason for this........other Mortgage Brokers were running approvals online that were getting turned down and still sending the files into Countrywide because they had no other place to go with them. What better example of 'Throwing It Against The Wall' than this practice? Also, taking a look at how loans are performing that are coming from this Bank or this Broker should be a regular practice to make sure you are doing business with the right companies. I think BOA will be on top of this to ensure they don't experience similiar problems.
- As far as Mozilo's take home from Countrywide's sale to BOA, it might not be a bad idea for Mr. Mozilo to float a few bucks to do his part in helping out the current Market from a Money Perspective. And Mr. Mozilo, if you don't think you want to do that, you are always welcome to invest give some money to the International Bank of Jason Sardi:-)
Jason Sardi
Mortgage Consultant
1-866-262-8720 ext. 229
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