T-minus ? until Countrywide goes under.. . .

NEW -> Contingent Buyer Assistance Program
morekaos,





As much as I like to pick on Countryfried and their head chef The Tan Man the Fitch ratings on 2002 MBS deals are justified. The CWMBS 2002-25 was originally a $1.2 billion deal. The current balance is about $150 million or 13% of the original balance and only 1% $1.5mil of that is delinquent or REO.





Now if you were to tell me the AAA ratings were affirmed on the CWMBS 2006-HYB1 that had an original balance of close to $1.2bil and a current balance of $868.5mil. Then I would get excited. This toxic waste of a MBS pool has 5.22% $45mil 30 days or 60 days delinquent and 4.69% $40.7mil REO, BK or in foreclosure for a grand total of $85.7mil.





That $16bil for loan mods isn't going to go very far when this is just one pool. I don't even want to tell you how bad the option ARMs are doing. The best description is Chernobyl, with toxic was just spreading faster and wider than ever imagined.
 
<p>They are eating themselves now. . .</p>

<p><a href="http://biz.yahoo.com/ap/071102/new_century_countrywide_suit.html?.v=1">online.wsj.com/article/SB119405087481781173.html</a></p>

<p>More work for the lawyers though...job security is always good. </p>
 
<p>Although not directly related to CFC. . . this article has some interesting points about lenders (including CW) and their strategies on "helping" overextended borrowers.</p>

<p><a href="http://online.wsj.com/article/SB119405087481781173.html?mod=yahoo_hs&ru=yahoo">online.wsj.com/article/SB119405087481781173.html</a></p>

<p>"Struggling homeowners seeking mortgage relief from their lenders say they are hearing a tough message: We can't help you unless you first fall behind on payments."</p>

<p class="times">"Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling, says its member agencies in areas from Southern California to Texas have seen the same trend. "One counselor in Amarillo, Texas, just told me 'It seems to me they almost encourage people to fall behind in order to find help,' " Ms. Cunningham says.</p>

<p class="times">Mortgage companies, on the other hand, often point to the way home loans are sold and packaged today as the key factor that complicates their efforts to help borrowers. Most mortgages are no longer owned by the companies that originated them, but are funneled into securities and sold to investors world-wide."</p>
 
I can't remember of find where we were talking about our latest trades, so I am throwing in here. Covered C and BSC shorts this morning just after opening, and am holding onto Mer and Leh puts.
 
<p>Gadzooks, just how often did Countrywide screw up its mtg payoffs?</p>

<p>By the way, that is a title claim. Title insurers insure a good first lien of record. If the prior lien was underpaid then the later mtg is arguably really a second. Except if they filed a Satisfaction, how could they argue against their own Sat?</p>

<p>Also, the borrower probably knew darned well that they owed more than was on the pay off.</p>

<p>I used to do title claims, and in this case the Seller was most likely a scoundrel taking advantage of a goof-up. Except I have no sympathy for Countryfried; they probably didn't have enuf employees in the payoff dept to actually properly service the payoffs. Most payoff letters have weaselly language in them purporting to get them off the hook for these types of errors.</p>

<p>Lots of luck with that one.</p>
 
<p>I have always been a fan of Bill Gross as far as local businessmen go. I saw him say on CNBC this morning.</p>

<p>"Gross pegged the number value of subprime and alt-A loans that are "basically garbage loans" at $1 trillion. Of those, Gross expects $250 billion worth to default"</p>

<p>These kind of numbers seem real. But the pain we have seen so far for Countryfried and Citi is just the tip of the iceberg.</p>

<p>Here is the article in Reuters <a href="http://www.reuters.com/article/marketsNews/idUKNYG00083220071105?rpc=44">http://www.reuters.com/article/marketsNews/idUKNYG00083220071105?rpc=44</a>


</p>

<p> </p>

<p> </p>
 
<p>Countrywide was reported on this blog to have at that point 4 to 6 weeks ago, a quarter trillion in foreclosures all by itself. If they didn't have any more foreclosures, and others were generating garbage at the same rate, and CFC was generating one in 5 loans that is one and a quarter trillion. </p>

<p>Of course, Countrywide may have generated a greater %age of garbage, and on the other hand, it probably has another quarter trillion or more to foreclose on. Who knows? maybe a lot more than that. So it looks to me that the foreclosures are a trillion and a quarter to 2 trillion problem. These won't be dead losses, say 50 cents on the dollar. So the losses will be in the 3/4ths of a trillion to one trillion. or more. Or, so says my crystal ball. . .</p>

<p>These are, needless to say, staggering figures. That's just the losses to the lenders. The losses to the borrowers? Who knows.</p>
 
It isn't the mortgages themselves which will cause the greatest losses. It is the CDOs, CDSs and the leverage against them.
 
<em>Is pdiddy trying to move up on the posting ranking or what?





</em>I do not know if that is the case. He has been asked to stop and his posts are being deleted.





I do not like it when the IHB regulars get annoyed.
 
<p>I read that they did, and it ended up being immensely high, like 40 times. In fact, I think I read that either on this blog or on one of the posts.</p>

<p>Speaking of posts, is Sue ok?</p>
 
<p>Dubious Fees Hit Borrowers in Foreclosures </p>

<p><a href="http://www.nytimes.com/2007/11/06/business/06mortgage.html?_r=3&oref=slogin&ref=business&pagewanted=print&oref=slogin">http://www.nytimes.com/2007/11/06/business/06mortgage.html?_r=3&oref=slogin&ref=business&pagewanted=print&oref=slogin</a></p>

<p>Questionable practices by loan servicers appear to be enough of a problem that the Office of the United States Trustee, a division of the Justice Department that monitors the bankruptcy system, is getting involved. Last month, It announced plans to move against mortgage servicing companies that file false or inaccurate claims, assess unreasonable fees or fail to account properly for loan payments after a bankruptcy has been discharged. </p>

<p>On Oct. 9, the Chapter 13 trustee in Pittsburgh asked the court to sanction <strong>Countrywide, the nation’s largest loan servicer, saying that the company had lost or destroyed more than $500,000 in checks paid by homeowners in foreclosure from December 2005 to April 2007. </strong></p>

<p>The trustee, Ronda J. Winnecour, said in court filings that she was concerned that even as Countrywide misplaced or destroyed the checks, it levied charges on the borrowers, including late fees and legal costs. </p>

<p>“The integrity of the bankruptcy process is threatened when a single creditor dishonors its obligation to provide a truthful and accurate account of the funds it has received,” Ms. Winnecour said in requesting sanctions.</p>

<p>A Countrywide spokesman disputed the accusations about the lost checks, saying the company had no record of having received the payments the trustee said had been sent. It is Countrywide’s practice not to charge late fees to borrowers in bankruptcy, he said, adding that the company also does not charge fees or costs relating to its own mistakes.</p>

<p>Loan servicing is extremely lucrative. Servicers, which collect payments from borrowers and pass them on to investors who own the loans, generally receive a percentage of income from a loan, often 0.25 percent on a prime mortgage and 0.50 percent on a subprime loan. Servicers typically generate profit margins of about 20 percent.</p>

<p>Now that big lenders are originating fewer mortgages, servicing revenues make up a greater percentage of earnings. Because servicers typically keep late fees and certain other charges assessed on delinquent or defaulted loans, “a borrower’s default can present a servicer with an opportunity for additional profit,” Ms. Porter said.</p>

<p> </p>
 
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