I know, I know, most people bought houses on ARMs, counting on the increased value of their home to allow them to refinance to a fixed rate mortgage within a year or two. I was pretty young and green to real estate when I first bought my duplex, and did exactly that. Luckily, the market was still cooperating with me at that point. But if it hadn’t been, I wouldn’t be looking to the government or my mortgage company to bail me out… I knew that I was taking a risk. Gambling. Speculating. People have somehow lost sight of what trying to predict the market actually means (that would be gambling).
More about Countrywide’s statement, from Bloomberg.com:
Countrywide Financial Corp., the biggest U.S. mortgage lender, may change terms on $16 billion of adjustable-rate mortgages before the end of 2008 so borrowers won’t lose their homes to foreclosure.
About 52,000 customers who hold subprime loans can refinance into prime and government-backed loans, the Calabasas, California-based company said today in a statement. Such loans usually carry lower rates. Terms will be eased for another 30,000 who may fall behind or have already missed payments when their adjustable rates rise.
Treasury Secretary Henry Paulson last week called the housing slump “the most significant current risk to our economy” and urged lenders to modify and refinance more loans. Countrywide has been the target of protests by housing advocates who say the company has done little to help homeowners with overdue payments or to halt foreclosures, which set a record in the U.S. during the second quarter.
“This is a big step,” said Bruce Marks, chief executive officer of Neighborhood Assistance Corporation of America. “Countrywide sets the standard for servicing and how lending gets done.” The Boston-based advocacy group has demanded Countrywide make loan modifications easier. The company’s willingness to cut interest rates without penalty payments is a welcome move, Marks said.
Countrywide fell 42 cents, or 2.7 percent, to $15.26 at 11 a.m. in New York Stock Exchange composite trading. The stock has declined 64 percent this year.
- ARMS - better than a fixed rate mortgage?
- The cost of the housing market "correction"
- (Almost) Free Houses in Detroit
- Subprime-mortgage crisis government aid...a handout? or a safety?
- It's official, I am an armchair real estate investor
- The McMansion is (finally) falling out of fashion?
- Blasphemers! (or, is a house a liability rather than an asset?)
- Piggybacking for a higher credit score (and better mortgage rate)
- So, the rental market is getting a bit better. But (predictably), condos are getting in the way.
- Flipping Condos - Are all of the speculators in trouble?
- Thinking about another duplex. But only if it can cashflow.
- If you can't rent it, sell it
- Buying a fourplex