More of the Same from The JFP, Clarion-Ledger, and Jim Hood
Does anyone over at the Jackson Free Press or Clarion-Ledger know how to do BASIC research? Both publications just published stories touting Jim Hood's so-called settlement with Countrywide resulting in a loan modification program for distressed borrowers. Ronni Mott wrote in the JFP:
"If you or someone you know has a mortgage with Countrywide, relief could be on the way. {Verbatim from the Attorney General's office}:Mississippi will be included in the national settlement with Countrywide Financial Corporation (CFC) that will allow eligible borrowers to participate in the company’s loan modification program, announced Attorney General Jim Hood.
The program went into effect yesterday, December 1, 2008, and was designed to help borrowers who financed their homes with subprime loans or adjustable rate mortgages serviced by Countrywide and originated prior to December 31, 2007. Countrywide was bought by Bank of America on July 1, 2008....." Countrywide Story
Clarion-Ledger Story
Not so fast my friend. See, Countrywide's loan modifications might not be legit after all as the investors filed suit against Countrywide. Countrywide sold most of these loans to investors and is apparently trying to dump the changes to these mortgages on the investors who purchased them in violation of the contracts (according the the lawsuit).
Housingwire.com reported:
"A predatory-lending settlement that will see Countrywide modify as many as 400,000 loans, reducing payments due on mortgages it services by as much as $8.4 billion, has led a group of investors to sue Bank of America Corp. (BAC: 13.96 -0.64%) and Countrywide. In a complaint filed Monday morning by the New York-based law firm of Grais & Ellsworth LLP, investors say the language in their contracts require the Calabasas, Calif.-based servicer to purchase all modified loans out of affected securitization trusts. Countrywide has said it does not believe it is required to do so.....
Countrywide first announced the loan modification program on Oct. 6, as part of a settlement with 15 different state Attorneys General that had sued the lender over predatory lending charges....." Housing Wire Story
Complaint
The Market Ticker's Karl Denninger pointed out:
"The gist of the complaint is that the settlement was not going to come out of Countrywide's (now BAC's) hide, but rather was to be effectively offloaded to the investors to whom CFC sold their loans!
That's a cute trick - settle a lawsuit but then force the costs of the settlement off on investors who had no vote in approving the settlement in the first place.
I'll bet this gets legs, and will derail not only this "modification" gambit but anything similar, until and unless the banks involved figure out how to pay down the investors on their own, thereby covering what would otherwise be their losses.
(It should be that way too - the investors didn't make the bad loans; if they're going to take losses it should be through outright defaults, not through forced cramdowns that benefit the banks but screw the bondholders!)" Investor Pushback
The lawsuit was reported on Bloomberg's website as well. Bloomberg Story. It was reported in the New York Times and a plethora of other media outlets as a Google Search would show. This so-called settlement is going to get very interesting.
5 comments:
Ignore anything Ronni Mott writes and posts about business. She makes Richardson look like an experienced and savvy sage.
Since you mentioned more of the same ... is Alan Lange any less of a whining homer than Donna Ladd as he lamely tries to connect the evil Jim Hood dots for his personal pal, and Haley Barbour cousin, Entergy CEO Haley Fisackerly?
i wouldn't call lange a homer. he's more like a gomer.
read this: Louisiana Public Service Commission turning tricks on the regulatory trade
gomer lange thinks everyone on the mississippi psc are saints and entergy has our best interests in mind.
Most people don't understand the investors' side. These securitized "packages" are part of the larger collateralized crap sold with higher interst rates at a discount, which are now screwing up many of the "bonds" sold in the previous couple of years. More defaults meant less chance of actually getting the interest payments, and therefore brought down the "price" of the bonds since they were no longer trading.
for gomer lange
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