I agree.  Did you hear of him selling all his shares too? Talk about insider trading...

Mike:  This is an unbelievable statistic: 71% of it's borrowers with Option ARM mortgages were making the minimal (less than interest only) payment on these loans!  Someone seriously needs to reach these consumers and teach them simple economics.  I'm with you on the BOA possibly having 'Buyer's Remorse'!!

Debe,

The next two or three quarters will not likely reverse the trend.

David,

I hadn't read that, but then again, I don't get out much.  LOL

Mike in Tucson

Mike, I've thought since day one that the BoA deal seemed like a bad move. Time will tell, but it's certainly not getting any prettier.

This is interesting because during the hey day, Countrywide was among the most difficult to get people approved through.

Mike, I thought CW was moving to lock down borrowers ability to tap into their HELOC... seems like I read something from them a few weeks ago. Was this a limited shift in policy or did it just not materialize. I would think shutting down that LoC would be an immediate concern... why keep extending money on an asset that's decreasing in value by the moment?

Mike,

The fact that a whopping 71% of homeowners with option ARM mortgages are only paying the minimum presents a grave danger to Countrywide's portfolio. In that light Bank of America's purchase of Countrywide appears a bit treacherous.

Mike:  I'm parked here to read comments and learn more about your industry and all that is going on with subprime and option ARM mortgages.  The effects are far reaching.

Mike, What an amazing stat!.  I am sorry I really did not see that one. Thank you for letting us know.  The option arm is not a bad loan. However, to many bad LO's places people in them and never explained how it worked.

Mike, Indeed, I wonder if Bank of America is biting it's nails.  (Does that make sense?  Do banks have fingernails?)

great post Mike. I gues B of A thought they were buying at a bottom price otherwise it does not make sense

Mike!  Bernanke thinks foreclosures could add to the housing inventory problems!  Who knew?  CW is not the only one with "stinky" portfolios though - the pension funds are the ones I'm concerned about.  Many of the funds purchase mortgage loans - and when they start loosing values - I think things will get worse.

Mike - this is interesting - I feel so sorry for all the homeowners that got caught up in this mess!

There is a "ton" of chatter out there about the 2nd wave of mortgage losses coming in the next 12 months from ALT-A Pools and Option Arm pools; ALT-A bonds are trading at 70cents on the dollar right now, and a year ago they were trading at PAR.

Watch what happens with Thornburg Mortgage...their margin calls (which they can't keep paying) are going to spread to other folks as well...the next tipping point unfortunately!

Mike, I feel Countrywide is under a lot of management pressure to approve only A+ paper quality loans.  In the last 2 months, I have had nothing but trouble trying to get loans approved by them.

Kevin,

I haven't submitted a loan to CWBC since last fall, but I hear that they're still pumping 50,000 loans a month through the system.  Applications, though, are double that number, so there's significant fallout.

Rich,

Thanks for the heads up on Thornburg.  We'll keep our eyes peeled.

Bill & Barbara Jo,

A lot of borrowers don't deserve your pity.  I turned down one young woman in 2006 who had bought a condo, and wanted to buy a second to flip it.  Knowing her financial situation, I suggested that she wait a little before biting off the second condo.  "What?"  she asked.  "I'm going to lose, like, three or four months appreciation."  She went somewhere else, bought the condo, held them both too long, and went bankrupt last fall.  Poor homeowner?  Not!

Eleanor,

Bernanke is urging banks to forgive a portion of their mortgage portfolios where the borrower is at risk of default.  Let's see how many line up for this!

Dan,

Biting them to the quick, I would guess.

Matt,

I'm in agreement with you on this!

Donna,

You're getting your money's worth.  Put another quarter in the parking meter!

Esko,

B of A made a bad bet.  It went south on them.

Jesse,

They tried to do that.  Unfortunately for them, the HELOC is a contract.  Contract law prevails.

Gayle,

I didn't originate many loans through Countrywide during the heyday, but the wall street firms whose money I lent sold the paper to Countrywide.

Colleen,

Can you say "Ugly?"  That's the picture.  Thanks for commenting.

Mike in Tucson

Mike.... I don't see the BofA deal happening and stuff like this makes more sense to why it wouldn't go through.  And in regards to Kevin's comment, right above your "polar bear in the snow storm" comment... why even use them when their pricing sucks. They are literally 1 1/4 pt off than many other investors. Gee, that means that you could either make more or get your client a better deal.  Just my .02... but I love stats as these.

Overall, it just showed that this was a toxic loan because too many loan officers sold it to make money and I would put money on it, that they sold the client, never really showing the worse case scenario... and if anything, telling them that it won't ever get that bad nor go up in payment... what clients always want to hear, right?  Good news that can't be predicted...  lol   Sad, but so true...

Jeff,

I don't see them backing out.  Thanks for a thoughtful comment.

Mike in Tucson

Jeff and Mike, I think that the end result will be BofA buys the Bank side of CW, cherry picks the loan production channels from the mortgage side that are profitable, and jetisons the rest.  With the pending lawsuits from shareholders, I don't see any portion of the acquisition being completed until 2009.  The shareholders are arguing that the buyout price is too low, and if I held stock, I would argue that as well.  I'm not a shareholder, and personally think that CW stock is worthless.

Countrywide is not alone doing the Option-ARMS.  Washington Mutual, actually has a bigger percentage of these loans.  Countrywide always gets scrutinized since we are the biggest lender out there.

B of A got a bargain at $4billion.  Anyone who can't see that obviously is not familiar with Countrywide, the company.  The company is not as in bad of shape as the media potrays.  You have a right to your opinion and I'm obviously biased since I work for Countrywide, but we will see who is still standing when the smoke clears.

If you guessed B of A and Countrywide, you are correct.

I'll be curious to hear how Mozillo explains all this to Congress in the upcoming hearings.

Mike,

I have to agree with Jeff I also do not see the Countrywide deal happening.

I also am curious to see how all of this mess is going to pan out over the next months to come.  I was told by my appraiser that over 1 million ARM loans are to mature in September 2008.  What will happen when this starts?

I love the photo in this blog. 

Thanks, Lu!

Gary,

It will keep us all on the edge of our seats, no doubt.  New foreclosure numbers come out tomorrow.

Kathie,

They'll be too busy talking about the governor of New York and his sex scandal to notice!  LOL

Marc,

I hate to disagree, but they just got taken.

Rich,

I'm not buying any.  We'll see how this pans out.

Mike in Tucson