Countrywide's Increasing Stupidity

I am completely astounded by a recent transaction that fell apart on a Countrywide owned foreclosed property. Most REO (bank owned) properties will require a pre approval letter as well as addendum's prior to presenting an offer, but countrywide requires a pre approval letter from a countrywide branch office...not a countrywide program that a mortgage broker can provide, but someone who is directly on the Countrywide Payroll. If this isn't a blatant example of a large institution trying to steal loans from smaller lenders, I don't know what is.

Its bad enough that in addition to the lengthy purchase agreement commonly associated with a purchase, Countrywide requires the buyer to agree to a 15 page "addendum" that is actually a purchase contract that rewrites every element of the original contract to the benefit of Countrywide, or that the buyer has to agree to verbal counteroffers that aren't binding until the bank decides whether they want to sell the home...all of which takes an inordinate amount of time, usually 1 to 2 weeks to just get an answer.

A normal transaction has every offer and counteroffer in writing with time tables that have to be adhered to. BUT in addition, if Countrywides loan officer doesn't have a program that will qualify the buyer for the purchase, they wont consider the offer. It doesn't matter that a perfectly good loan and buyer is now going to purchase a home from someone else, for more money than Countrywide will approve them for, and that most likely they will buy from a private party instead of considering a foreclosed property because the Countrywide experience was such an incredible pain in the butt.

Perhaps Countrywide hasn't been watching the news...or maybe they enjoy having more foreclosed properties on their books than any other lending institution. Or, of course there is the fact that our government will spend our money infusing cash available for loans into the economy to make sure lenders like Countrywide have enough money to lend to get more mortgages, so lenders like Countrywide have the ability to be as selective as they want...where is the incentive to actually sell the properties! Of course when you originate 1 out of every 7 loans issued in the US and have borrowed over 14 billion dollars to bail yourself out from the bizarre variable rate interest only mortgages you were issuing to any mammal with a pulse a year ago, I guess normal intelligence and operating procedures just go out the window.

The really ugly thing is that the longer they sit, the worse they get and eventually Countrywide will have to come down even further to get their repos to sell, which in turn will lower the property values of the homes surrounding the home they were too shortsighted to sell to a good buyer.

I mean is it just me, or do other people see that there is maybe something wrong with this picture. I understand their desire to give an incentive to keep the loan in-house by requiring the buyer to qualify with them, but it just doesn't seem right to discriminate against a buyer or a lender they "don't trust". Seriously, isn't that what an earnest money deposit is for? So if the buyer fails to purchase, the seller has some recourse? Why not require a higher earnest money deposit? Or hey here's a novel idea, accept backup offers until closing. Require weekly updates from the lender until closing.

I am trying to imagine what would happen if a private party required all interested buyers to qualify for a loan to purchase their house from the sellers cousin Bubba of Bubbas Loans & Beer Emporium. I wonder what kind of Fair Housing Lawsuit would be brought up if ol Bubba didn't like the lender that the buyer was using and because his bank account was a bit low and his program wasn't able to work for the buyer that Bubba and his cousin with the house said "naw we don't trust that you can close, sooo you can't have this home"...

Maybe I'm just pissed because my client lost a deal and is now discouraged to the point where they feel buying a home is just too much of a hassle...

...or maybe there is just something a bit wrong with a seller be it a bank or a private party being able to dictate who a buyer can use as a lender...

For my part, from this point on I will make sure all my clients know that if there is another option besides a Countrywide owned property they would be very wise to avoid the hassle of dealing with a short sighted organization that is more interested in trying to steal loans from qualified lenders then they are in actually selling houses.

Discount rate doesn't mean discounted consumer loan rates

I recently had a buyer ask why their projected apr wasn't being adjusted down by their lender on a pre approval letter. They had heard about the "Fed cutting the rate" and assumed that meant that loans were going to immediately have lower rates as well.

The rate the fed cut, was the "discount rate" the rate that banks are charged by the federal government. The one to keep an eye on that has direct impact on consumer loans is the Federal Funds Rate. What has recently happened will create a bit more stability in the economy as a whole and may make loans more available, because banks will have more liquid assets to work with. The fed may actually lower the federal funds rate when they meet again in September, but they have held steady now for the last 9 sessions. If they do however decided to drop it, look for a quarter to half percent drop.

Encouraging Statistics for Las Vegas
The annual MLS statistics for homes sold through the Multiple Listing Service (resale homes) shows average prices are up, even though volume is still down. The stats actually show that while peaky, volume in general has increased.

This could be due to investors finally realizing what a great time it is to buy in Las Vegas. Especially if you don't have to SELL an existing home in this market to get the job done.

It is also very nice to be able to point to statistics that clearly show that our market isn't sliding back as far as pricing goes.

We will still see spikey sales prices, especially as more foreclosures come onto the market, but as a whole it seems the Las Vegas Housing Market is reflecting the good health of the Las Vegas Economy as a whole.

I firmly believe that those who see the potential right now and pick up investment properties will really benefit greatly in 2009 when the $30 billion dollars worth of construction is finished on the strip. When you consider that for every hotel room added, 1.5 to 1.8 jobs are created there is going to be a demand for housing and not just home ownership, but rental housing as well.

Again, it's a great time to buy!!!!