The Largest Lender and its Greatest Enemy, Sitting Side by Side
I thought I would share some commentary from Diana Olick of CNBC in regards to her listening to a hearing of the House Financial Services Committee this morning.
She said they were talking about "mortgage issues and then said (I know, I’ve really got to get out more)." Yes, we all do, but the facts are that this is fascinating and by far the biggest "issue" that our country is facing right now. You can't keep your eyes off what lender has went belly up, what CEO has been given the axe and how much Countrywide stock is down today.
Listening or watching government testimony is part of the "reporting" or "blogging" part of my job. I didn't catch the hearing this morning, but the last few hearings that I have witnessed, were by far the best television I have watched in years. Nothing gets me happier (well almost) then seeing our nations Senators tear into Ben Bernake about our "mortgage issues" and housing crisis, live on TV!
Unfortunately, for Diana Olick, today was not as entertaining as she'd like it. However, I thought I'd share some comments with you that she had made in regards to NACA (The Neighborhood Assistance Corporation of America) and Countrywide's new relationship.
The next panel included two strange bedfellows: Countrywide Financial [CFC 9.42 -0.86 (-8.37%) ] and NACA, or the Neighborhood Assistance Corporation of America. NACA had been a huge critic of Countrywide, boycotting its local offices and pretty much blaming it for the fall of the housing market.
Anyway, the two are now working together to modify troubled loans in a unique agreement that, in my mind, is fascinating. Bruce Marks, NACA’s chief, told me yesterday that when the Countrywide official asked for a meeting with him to discuss this, he didn’t believe anything like this would ever happen.
I wanted the lawmakers to get a better understanding of this agreement, of the unique circumstances that actually have the investors in these loans willing to forego contracts and modify the products they purchased.
And the fact that Countrywide is willing to spend all this time and manpower modifying the loans, for which they get no additional servicing fee…well the whole thing, to me at least, is an unbelievable example of just how bad all these loans are.
The largest lender and its greatest enemy, sitting side by side, as the lender basically admits that the loans it sold are in deeper trouble than we thought, not to mention the act of modifying them in such a way, is a tacit admission that the loans were bad to begin with. Unfortunately, barely three or four lawmakers actually made it to the hearing. Need I say more?