Money Mailbox Friday - Countrywide Home Loans
If this is your first time visiting, check out the story behind this blog. Otherwise, please join the others by subscribing to my RSS feed or get updates via email so you don't miss any personal finance articles!
I received a postcard from Countrywide Home Loans yesterday advertising the benefits of their home loan program. Features include:
- Down payment and closing cost assistance
- 100% financing
- No minimum credit score required
- Flexible qualifying guidelines
- 30, 35 and 40-year loan terms available
- Fixed rate and fixed period Adjustable Rate Mortgages (ARM) options
During the housing boom, many of these loan agencies advertised to potential home owners, telling them to buy homes. Convincing statements like “Why rent when you can own” were resonating throughout all of America.
In fact, my wife and I almost took the plunge in March of 2007. We were looking at a property in a newly developed community and even went to their phase release. I remember waking up at 3:00am, driving to the house and dreaming about what we can do to the front / backyards. Luckily, the enthusiasm of buying our first home didn’t cloud our judgment in the end. I really need to thank the Irvine Housing Blog for giving me the necessary information to stay patient and wait. If it wasn’t for this blog, the home buying decision would have been a real net worth destroyer.
Getting a loan was never a problem a year ago, as companies like Countrywide gave everyone in the loan process huge incentives to approve loans. It didn’t matter if no one provided proof of income, nor did it matter that they were making $50,000 a year while buying a $500,000 house with no money down.
To make matters worst, the ARM loans were misused to the point that there are now millions of people facing foreclosure. We hear terms like sub-prime and HELOC abuse all the time but there are many mislead people in the average working class in serious trouble. These people are amongst us, they are our families and friends and not just people we hear about in the news. Being in California where home appreciation was one of the steepest in the country, I’ve seen my fair share of unhappy housing stories. I have two friends who are facing foreclosure and I can tell you that the foreclosure process is not something you want to go through. I totally overreacted when I wrote the post about ING’s disturbing ad (readers actually corrected me in that ING is actually a responsible lender and company) but if you see people you know suffer, you might do the same when ads like those come in your mailbox.
With so many people in such pain and the worst yet to come, Countrywide is still trying to advertise 100% financing. We can argue all day that it is really the people who brought their fate upon themselves but does Countrywide really have to help push them off the cliff?
You can now follow me on twitter! Alternatively, subscribe to my RSS feed or get blog posts through email if you enjoyed this post. You might even win a prize or two by doing so!
Bankruptcy should be viewed as the last resort and is not to be taken lightly. Ensure that you have considered all the other debt solutions. A consolidation loan is a popular option.
Loading ...
It’s very easy for us who don’t have a house to talk and laugh about how ignorant those people who are facing foreclosure is. Thank you for reminding us that it could’ve been us!
I have my mortgage with Countrywide. They’re always trying to sell me something I don’t really need, like this really expensive rip-off type of mortgage insurance, for example. When I get older and my brain goes a little soft, these people will still be hounding me, and then, I hope I still have enough judgement to fend them off. I’m sure older people are one of their prime targets.
Glad you didn’t get pulled in - I know some people really hurting as well. It really is not fair.
I live in Orange County also and have seen everything. Some people I know just stopped paying their mortgages completely because they said there’s no way they can keep up with the payments anyway.
The market is going to get worst so we will just have to wait and see what happens with stocks and the economy and everything else.
There are several things you can do to get the best possible loans but he first thing is to make sure you know your options. Thanks for the info!
Purchasing a house and lot is really a make or break in ones budget. Better study it carefully first before deciding.
Renters are getting hurt, also, as the apartments or houses they live in are being foreclosed and their belongings are being thrown into the street with little warning.
What happened to the rules that were around when I bought my townhouse 23 years ago? I had to show proof of employment and put 20% down. Bill Moyers’ Journal covered this today and we need to put those old regulations back in the process. As we can see from the solicitation you got, lenders have not really tightened up like we hear.
My loan has passed into many different lenders’ hands in the past years and I get those offers for mortgage insurance all the time.
What scares me most is that there are so many people out there that can’t tell that a 30, 35 and 40 (!!!!) year loan is a very bad thing. Of course, ” No minimum credit score required” and “Flexible qualifying guidelines” are a big red flags too!
It all comes down to financial literacy. The government can regulate till the cows come home, but deceitful lenders will always adapt to the loop holes. The best defense is a good financial education.
And educuation is what is needed. The blogging world certainly can help. However, I found when I counseled friends, they ignored my council and bought the homes anyway.
I don’t know the personal stories of the people you know, I do know it seems that people did not respect the nature of buying a home. A home for most people is the biggest purchase of the lives. It demands respect. It demands that you read the fine print. It demandz that you know what you are getting into, despite what some mortgage lender and/or sales agent is telling you.
I will say shame on Countrywide. I really feel those advertisements probably verge on bait-and-switch, because most people can’t qualify for those programs anymore and they aren’t right for most people. It doesn’t appear that they learned their lesson, but of course they got a bail-out.
Unfortunately it just seems like personal responsibility has gone out the window.
I git a call from a lender the other day trying to get me to refinance. He finally quit trying after I told him I have about 14 years left on only $41,000 and do NOT want to get cash from my home equity.