Press Release- Save the American Dream

CALL MICHAEL GROSS, COUNTRYWIDE’S DIRECTOR OF LOSS MITIGATION, AT 805-520-5679 AND TELL HIM TO FIX MS. WILLIAMS’ LOAN!!!

Volume 15, Issue 20
Published September 19th, 2007

News Lead

Gimme Shelter

Foreclosure Can Be Prevented, But Only If The Lender Actually Cares

By Charu Gupta

Work it out - Arlene Williams meets with an ESOP counselor.

Arlene Williams narrowly avoided foreclosure, but is back in the hole. All she wants is a lower monthly payment on her home mortgage, one she can afford, so she has money left over to care for the five children she’s been raising since her sister passed away.

Most of the time, the 53-year-old Williams manages to keep her composure when in public. Only occasionally does her voice seem on the verge of cracking, like when she’s on the phone with Countrywide, the home loan company that holds Williams’ future in its hands. One afternoon last week, Williams made her way to the East Side Organizing Project, a free housing counseling agency, still in her janitor’s uniform, for yet another conference call with Countrywide.

“It’s like nobody is listening,” Williams tells the representative she’s never met. With the help of ESOP, Williams has, since July, been trying to negotiate new terms for a first and second mortgage, both subprime and with high interest rates ready to jump even higher. She can’t keep up with the payments.

The man on the line keeps repeating that Countrywide wants to help.

“We want to help find any way to keep you in the property,” he says, “and keep it affordable for you.” But he and Williams just seem to talk past each other.

For months now, since the subprime mortgage mess has escalated to epic proportions, a common refrain has emerged: Call your lender. Don’t let the legal notices pile up. Get help, avoid foreclosure. Consult housing counselors. Refinances, waived fees, fixed interest rates and other monetary balance reductions are there for the taking.

The reality, however, has been quite different. People have flocked to national hotlines, nonprofit agencies, government-sponsored home preservation clinics and the lenders themselves for help. But only a few companies are working quickly or sincerely toward this end. The rest make it difficult to actually change loan terms. Borrowers, meanwhile, are left in a lurch by lenders’ foot-dragging or their misinformation about how much control or authority there is to in fact rewrite terms.

Arlene Williams entered into home loans with Countrywide late last year after, she recalls with wonder, a mortgage broker followed her to work. Williams’ sister had died of cancer, leaving behind five children with nowhere to go; their respective fathers had abandoned them. So Williams needed a new home for her suddenly large family.

Countrywide signed off on a first mortgage. A second mortgage covered a nearly $40,000 down payment.

Williams took on this debt because she’d assumed that as a janitor raising five kids, she’d qualify for some form of public assistance. She was wrong. By March, Williams was on the county’s pending foreclosure list, her mailbox flooded with “home rescue” solicitations. Williams called one to help her obtain lower monthly payments with Countrywide.

The service asked for a $1,200 fee. Williams agreed, thinking that the service would arrange a consolidation of her loans, lower monthly payments and the waiver of some fees. Later, however, she learned that no fees were waived, and that her past-due payments were simply rolled into future monthly payments on the first mortgage. The interest rate remained unfixed, and the second mortgage was left as it had been. Williams was right back where she’d started, and $1,200 poorer.

That’s how she found herself at ESOP’s doorstep in July.

ESOP is among a handful of Cleveland-area housing counseling agencies, but the only one whose board members can boast an 85 percent success rate in getting loan workouts (Countrywide excluded), all because of a unique system of signed agreements between ESOP and lenders and loan servicers.

The agreements, explains ESOP Executive Director Mark Seifert, ensure the consumers’ interests. Without agreements, lenders and servicers have no obligation to do their best, especially with those borrowers negotiating without a housing counselor.

“The formality is a huge help,” says Mark Wiseman of Cuyahoga County’s Foreclosure Prevention Task Force, who oversees workout applications from most countywide housing counselors. “The battle is getting lenders to agree to concessions they’ll give people with their loans.”

For ESOP, known for its grassroots organizing and direct-action protests, almost all of its half-dozen agreements were hard won. Each requires a commitment to best practices, like accounting for a borrower’s ability to pay back the loan and a cap on broker fees, and loan servicing terms.

The trickiest part, Seifert says, has been figuring out which entity controlled, or serviced, the loan at the time the borrower wanted to renegotiate - usually months if not years after the closing papers were signed.

When three clients, each with a different lender, complained that they all had the same unresponsive customer service phone number, it was the first sign to ESOP that renegotiating a loan went beyond the institution that originated it.

The key was a segment of the mortgage enterprise known as “servicers.” Once a lender gives a loan, it then resells that loan to an investment bank. These banks throw the loan into a larger pool of mortgages, which in turn are auctioned off to individuals or groups of investors in the securities and trade markets. But these investors don’t deal with borrowers directly; they hire loan servicers to collect monthly checks and then disburse the cash to investors, all dictated by strict contracts with investors called loan pool servicing agreements (PSAs).

As ESOP began trying to get clients’ loan terms rewritten, the various entities involved - credit rating agencies, investment banks, servicers - all claimed their hands were tied by one or more of the others.

But in truth, PSAs offer a wide range of flexibility to servicers, Seifert learned. And as these PSAs have been renewed over the last 18 months, in the midst of the rising defaults and foreclosures, servicers have gained extensive authority to work out new terms - waiving interest payments or principal balance fees, and stopping foreclosures.

This knowledge, along with the formal agreements ESOP has with specific lenders and servicers, has helped immensely in winning new loan terms for clients, Seifert says.

But some companies, like Countrywide, have refused to enter into an agreement, preferring a “relationship” with ESOP and other area agencies. Jerry Durham, vice president for home preservation at Countrywide, would not tell Free Times why there is no agreement with ESOP and referred the question to a media relations person who did not return calls seeking comment.

“Most workouts are proceeding well, except for those with Countrywide,” Seifert says. “If we had a point person [there], and an agreement to work with us, things would move much faster.”

An example: For every 100 cases with a servicing company called Litton, ESOP reaches about 85 successful workouts within a matter of days. Out of 130 Countrywide claims, on the other hand, 15 have been worked out, and only two have met ESOP’s standards.

After some direct action by ESOP, infuriated executives agreed to a daily conference call. “The one-hour calls are a waste of time, so it’s not a victory,” Seifert says.

“You try raising five children,” Arlene Williams says in her conference call with a Countrywide rep, her voice on the point of a quiver. “They have no one. I mean, I had to do it. The fathers, we won’t even discuss that.”

But the only solution on the table, for now, requires Williams to abide by her first modification terms (which cost her $1,200) for another six months, before Countrywide will consider a second modification. (A county program that provides struggling borrowers up to $3,000 rejected this workout offer, on grounds that it was an unsustainable adjustable rate mortgage, sure to put Williams in default.)

Fixed rates and reductions in fees or principle balances are “not typical” of Countrywide’s loan modifications, Durham says. “Most of the time,” he says, “we’re looking at making payments more affordable.” When asked about Williams’ situation, and perhaps waiving interest rates or fees, Durham says, “We’d have to look at it. We would look to see what other options are available. We don’t want to establish expectations that are unrealistic.”

Countrywide was the nation’s number-one home mortgage lender last year, with CEO Angelo Mozilo taking home more than $120 million in compensation and stock gains. Last week, as the US Senate approved $100 million in funding for non-profits like ESOP, Sen. Chuck Schumer (D-NY) asked Mozilo to commit another $250 million to the cause.

In Cleveland two weeks ago, at a government-sponsored event for lenders, servicers and housing counselors to interact with borrowers, Countrywide had volunteered the soft-spoken, seemingly nervous Durham to speak. In between platitudes like “nothing is worse than doing nothing,” Durham put the burden of workouts squarely on the shoulders of housing counseling agencies. He repeatedly urged borrowers to call counselors - the crucial “third leg,” he said, in sealing workouts and preventing foreclosures.

ESOP alone is evidence of the need for more housing counselors. From less than 10 families a week, ESOP now processes close to 100 during its four weekly intake sessions. Yet, when contacted by Free Times last week about Schumer’s request for Countrywide to help out financially, Durham declined to comment.

One possible explanation for the reticence is that Countrywide doesn’t want to move cases along too fast. Mark Wiseman, head of the county’s Foreclosure Task Force, says that to rewrite loan terms, Countrywide must first buy back the loans from investors. But if they buy too many, they invite bankruptcy; too few, and they risk defaults and the wrath of investors. That’s why the answer is often, “we’re still looking into it,” Wiseman says.

In addition, says ESOP’s Seifert, Countrywide may fear the consequences of mass loan rewrites on the numerous pending investor lawsuits against it, lawsuits that allege Countrywide lied about the value of these mortgage bonds. “If they do the level of workouts they should be doing with the number of bad loans they did, at least in Cleveland,” Seifert says, “they would be proving the shareholders’ case that those loans were all garbage.”

The end result is a logjam. For this, Countrywide’s Durham does have an explanation. “When our borrowers call, we try to get agreements as quickly as we can,” he says. Delays in the process are usually caused by borrowers not having their information together, or investors requiring Countrywide to follow strict rules on workouts. Durham adds that “our goal is to keep the borrower in the home.”

Arlene Williams would like to believe that.

On the phone with the Countrywide rep, she pleads her case again. “I’m just wondering if there’s somebody humanly that understands, can help me get some type of, maybe even a fixed rate,” she says. “I just wish somebody would understand that I’m not trying to run from the mortgage, just help me get a fixed rate.”

For free advice and connections to nonprofit housing counselors, call the Cuyahoga County’s Foreclosure Prevention Task Force, 211 or 216.436.2000, or visit dontborrowtroublecc.org .

cgupta@freetimes.com

PRESS RELEASEFor Immediate Release, April 13, 2007Contact : Jenelle Dame, 216-361-0718, jenelle@esop-cleveland.org COUNTRYWIDE HOME LOANS PROVES SERIOUS DISREGARD FOR HOME OWNERS IN TROUBLEBorrowers are fed up, plan to visit Countrywide branch office at 27629 Chagrin Blvd., Ste. 102 Beachwood, OH 44122 office on April 16 at 11AM.Cleveland, OH

Maria Gutierrez, a Countrywide borrower working with ESOP to resolve her loan, attended Wednesday’s planning meeting to bring Michael Gross, a Countrywide representative to Cleveland.  ESOP’s Predatory Lending Action Committee has been working since November to meet with Countrywide, and has repeatedly been told “NO”.

Ms. Gutierrez’s troubles started when Countrywide put her payment in another borrower’s account, now she is facing eviction on May 22.  Her question is “Why do we have to pay for something Countrywide did?” 

Other Countrywide borrower’s have the same question.  Florence Miller said a broker employed by Countrywide gave her a loan, even though she did not have the income to support the payments.  The contractors paid for through the broker did not finish home repairs, and now Ms. Miller is left with a moldy, wet basement and unfinished work to the house’s electrical system.

Ms. Vivian Nichols is a borrower who was convinced to sign for an ARM loan, which is now unaffordable to her; however, Countrywide refuses to give her an affordable, fixed rate payment.  Ms Nichols stated that she is “scared of them calling me late at night and early in the morning”.  Ms. Gutierrez agrees by stating “Countrywide only thinks about the house, not the person.”

These borrowers and the over 80 others that ESOP is currently working with have had enough of the abuse by Countrywide.  In an attempt to get some answers for their repeated calls for help, they have decided to visit a local Countrywide branch.  The borrowers will bring small plastic sharks and the demand for Michael Gross to meet with them in Cleveland to discuss the servicing and origination practices related to their loans.  The visit will happen at 11AM on Monday, April 16 at the 27629 Chagrin Blvd. Countrywide branch office.

 For more information, contact Jenelle Dame, Community Organizer at ESOP- jenelle@esop-cleveland.org, or 216-361-0718

Read accounts of the events here:

 http://www.jec.senate.gov/hearings.htm#072507

http://jec.senate.gov/Documents/Hearings/07.25.07%20Subprime%20Mortgage%20Crisis/Cleveland%20Magazine%2007.2007.pdf

MEDIA RELEASE

For Immediate Release, July 25, 2007

Contact : Jenelle Dame, 216-361-0718 (office)

jenelle@esop-cleveland.org

ESOP’s community leaders fight predatory lenders, like Countrywide Home Loans, nationwide

In conjunction with the Joint Economic Committee hearing on the foreclosure crisis

Empowering and Strengthening Ohio’s People (ESOP) community leaders fight nationwide to combat the foreclosure crisis in Cleveland, OH.  Two ESOP leaders, Audrey Sweet and Barbara Anderson, are testifying before the Joint Economic Committee on July 25 at 10AM on the crisis, while back home, Countrywide Home Loan borrowers fight for their right to be homeowners.

Audrey Sweet is a Countrywide borrower who came to ESOP with a predatory loan, which Countrywide offered a modification, but also neatly avoided explaining any of the predatory terms in her origination paperwork.

However, Countrywide is not so willing to work with some of the other borrowers working through ESOP for a resolution.  In an attempt to get some answers on their loan resolutions, ESOP’s Countrywide leaders will be visiting a law office at 1:45 on July 25.  The law office location is being withheld from the public; however, you may contact the ESOP office for the address.   

According to 2005 Home Mortgage Disclosure Act (HMDA) data, Countrywide was the third largest lender in Cleveland. Despite claiming that sub-prime lending is a very small part of its portfolio, a full 21% of those loans were classified as “High Cost”. More importantly, the vast majority of those loans were made in minority census tracts.

ESOP’s goal is for Countrywide to sign a fair lending agreement so that any Countrywide borrower in Northeast Ohio will benefit from workout assistance, and any new Countrywide borrower will not be victim to predatory lending.

ESOP is a grass roots organization that uses community organizing to hold lenders and loan servicers accountable for their abusive practices. ESOP is a member of Community Shares.

-30-

August 26, 2007

Inside the Countrywide Lending Spree

By GRETCHEN MORGENSON

ON its way to becoming the nation’s largest mortgage lender, the Countrywide Financial Corporation encouraged its sales force to court customers over the telephone with a seductive pitch that seldom varied. “I want to be sure you are getting the best loan possible,” the sales representatives would say.

But providing “the best loan possible” to customers wasn’t always the bank’s main goal, say some former employees. Instead, potential borrowers were often led to high-cost and sometimes unfavorable loans that resulted in richer commissions for Countrywide’s smooth-talking sales force, outsize fees to company affiliates providing services on the loans, and a roaring stock price that made Countrywide executives among the highest paid in America.

Countrywide’s entire operation, from its computer system to its incentive pay structure and financing arrangements, is intended to wring maximum profits out of the mortgage lending boom no matter what it costs borrowers, according to interviews with former employees and brokers who worked in different units of the company and internal documents they provided. One document, for instance, shows that until last September the computer system in the company’s subprime unit excluded borrowers’ cash reserves, which had the effect of steering them away from lower-cost loans to those that were more expensive to homeowners and more profitable to Countrywide.

Now, with the entire mortgage business on tenterhooks and industry practices under scrutiny by securities regulators and banking industry overseers, Countrywide’s money machine is sputtering. So far this year, fearful investors have cut its stock in half. About two weeks ago, the company was forced to draw down its entire $11.5 billion credit line from a consortium of banks because it could no longer sell or borrow against home loans it has made. And last week, Bank of America invested $2 billion for a 16 percent stake in Countrywide, a move that came amid speculation that Countrywide’s survival was in question and that it had become a takeover target — notions that Countrywide publicly disputed.

Homeowners, meanwhile, drawn in by Countrywide sales scripts assuring “the best loan possible,” are behind on their mortgages in record numbers. As of June 30, almost one in four subprime loans that Countrywide services was delinquent, up from 15 percent in the same period last year, according to company filings. Almost 10 percent were delinquent by 90 days or more, compared with last year’s rate of 5.35 percent.

Many of these loans had interest rates that recently reset from low teaser levels to double digits; others carry prohibitive prepayment penalties that have made refinancing impossibly expensive, even before this month’s upheaval in the mortgage markets.

To be sure, Countrywide was not the only lender that sold questionable loans with enormous fees during the housing bubble. And as real estate prices soared, borrowers themselves proved all too eager to participate, even if it meant paying high costs or signing up for a loan with an interest rate that would jump in coming years.

But few companies benefited more from the mortgage mania than Countrywide, among the most aggressive home lenders in the nation. As such, the company is Exhibit A for the lax and, until recently, highly lucrative lending that has turned a once-hot business ice cold and has touched off a housing crisis of historic proportions.

“In terms of being unresponsive to what was happening, to sticking it out the longest, and continuing to justify the garbage they were selling, Countrywide was the worst lender,” said Ira Rheingold, executive director of the National Association of Consumer Advocates. “And anytime states tried to pass responsible lending laws, Countrywide was fighting it tooth and nail.”

Started as Countrywide Credit Industries in New York 38 years ago by Angelo R. Mozilo, a butcher’s son from the Bronx, and David Loeb, a founder of a mortgage banking firm in New York, who died in 2003, the company has become a $500 billion home loan machine with 62,000 employees, 900 offices and assets of $200 billion. Countrywide’s stock price was up 561 percent over the 10 years ended last December.

Mr. Mozilo has ridden this remarkable wave to immense riches, thanks to generous annual stock option grants. Rarely a buyer of Countrywide shares — he has not bought a share since 1987, according to Securities and Exchange Commission filings — he has been a huge seller in recent years. Since the company listed its shares on the New York Stock Exchange in 1984, he has reaped $406 million selling Countrywide stock.

As the subprime mortgage debacle began to unfold this year, Mr. Mozilo’s selling accelerated. Filings show that he made $129 million from stock sales during the last 12 months, or almost one-third of the entire amount he has reaped over the last 23 years. He still holds 1.4 million shares in Countrywide, a 0.24 percent stake that is worth $29.4 million.

“Mr. Mozilo has stated publicly that his current plan recognizes his personal need to diversify some of his assets as he approaches retirement,” said Rick Simon, a Countrywide spokesman. “His personal wealth remains heavily weighted in Countrywide shares, and he is, by far, the leading individual shareholder in the company.”

Mr. Simon said that Mr. Mozilo and other top Countrywide executives were not available for interviews. The spokesman declined to answer a list of questions, saying that he and his staff were too busy.

A former sales representative and several brokers interviewed for this article were granted anonymity because they feared retribution from Countrywide.

AMONG Countrywide’s operations are a bank, overseen by the Office of Thrift Supervision; a broker-dealer that trades United States government securities and sells mortgage-backed securities; a mortgage servicing arm; a real estate closing services company; an insurance company; and three special-purpose vehicles that issue short-term commercial paper backed by Countrywide mortgages.

Last year, Countrywide had revenue of $11.4 billion and pretax income of $4.3 billion. Mortgage banking contributed mightily in 2006, generating $2.06 billion before taxes. In the last 12 months, Countrywide financed almost $500 billion in loans, or around $41 billion a month. It financed 177,000 to 240,000 loans a month during the last 12 months.

Countrywide lends to both prime borrowers — those with sterling credit — and so-called subprime, or riskier, borrowers. Among the $470 billion in loans that Countrywide made last year, 45 percent were conventional nonconforming loans, those that are too big to be sold to government-sponsored enterprises like Fannie Mae or Freddie Mac. Home equity lines of credit given to prime borrowers accounted for 10.2 percent of the total, while subprime loans were 8.7 percent.

Regulatory filings show that, as of last year, 45 percent of Countrywide’s loans carried adjustable rates — the kind of loans that are set to reprice this fall and later, and which are causing so much anxiety among borrowers and investors alike. Countrywide has a huge presence in California: 46 percent of the loans it holds on its books were made there, and 28 percent of the loans it services are there. Countrywide packages most of its loans into securities pools that it sells to investors.

Another big business for Countrywide is loan servicing, the collection of monthly principal and interest payments from borrowers and the disbursement of them to investors. Countrywide serviced 8.2 million loans as of the end of the year; in June the portfolio totaled $1.4 trillion. In addition to the enormous profits this business generates — $660 million in 2006, or 25 percent of its overall earnings — customers of the Countrywide servicing unit are a huge source of leads for its mortgage sales staff, say former employees.

In a mid-March interview on CNBC, Mr. Mozilo said Countrywide was poised to benefit from the spreading crisis in the mortgage lending industry. “This will be great for Countrywide,” he said, “because at the end of the day, all of the irrational competitors will be gone.”

But Countrywide documents show that it, too, was a lax lender. For example, it wasn’t until March 16 that Countrywide eliminated so-called piggyback loans from its product list, loans that permitted borrowers to buy a house without putting down any of their own money. And Countrywide waited until Feb. 23 to stop peddling another risky product, loans that were worth more than 95 percent of a home’s appraised value and required no documentation of a borrower’s income.

As recently as July 27, Countrywide’s product list showed that it would lend $500,000 to a borrower rated C-minus, the second-riskiest grade. As long as the loan represented no more than 70 percent of the underlying property’s value, Countrywide would lend to a borrower even if the person had a credit score as low as 500. (The top score is 850.)

The company would lend even if the borrower had been 90 days late on a current mortgage payment twice in the last 12 months, if the borrower had filed for personal bankruptcy protection, or if the borrower had faced foreclosure or default notices on his or her property.

Such loans were made, former employees say, because they were so lucrative — to Countrywide. The company harvested a steady stream of fees or payments on such loans and busily repackaged them as securities to sell to investors. As long as housing prices kept rising, everyone — borrowers, lenders and investors — appeared to be winners.

One former employee provided documents indicating Countrywide’s minimum profit margins on subprime loans of different sizes. These ranged from 5 percent on small loans of $100,000 to $200,000 to 3 percent on loans of $350,000 to $500,000. But on subprime loans that imposed heavy burdens on borrowers, like high prepayment penalties that persisted for three years, Countrywide’s margins could reach 15 percent of the loan, the former employee said.

Regulatory filings show how much more profitable subprime loans are for Countrywide than higher-quality prime loans. Last year, for example, the profit margins Countrywide generated on subprime loans that it sold to investors were 1.84 percent, versus 1.07 percent on prime loans. A year earlier, when the subprime machine was really cranking, sales of these mortgages produced profits of 2 percent, versus 0.82 percent from prime mortgages. And in 2004, subprime loans produced gains of 3.64 percent, versus 0.93 percent for prime loans.

One reason these loans were so lucrative for Countrywide is that investors who bought securities backed by the mortgages were willing to pay more for loans with prepayment penalties and those whose interest rates were going to reset at higher levels. Investors ponied up because pools of subprime loans were likely to generate a larger cash flow than prime loans that carried lower fixed rates.

As a result, former employees said, the company’s commission structure rewarded sales representatives for making risky, high-cost loans. For example, according to another mortgage sales representative affiliated with Countrywide, adding a three-year prepayment penalty to a loan would generate an extra 1 percent of the loan’s value in a commission. While mortgage brokers’ commissions would vary on loans that reset after a short period with a low teaser rate, the higher the rate at reset, the greater the commission earned, these people said.

Persuading someone to add a home equity line of credit to a loan carried extra commissions of 0.25 percent, according to a former sales representative.

“The whole commission structure in both prime and subprime was designed to reward salespeople for pushing whatever programs Countrywide made the most money on in the secondary market,” the former sales representative said.

CONSIDER an example provided by a former mortgage broker. Say that a borrower was persuaded to take on a $1 million adjustable-rate loan that required the person to pay only a tiny fraction of the real interest rate and no principal during the first year — a loan known in the trade as a pay option adjustable-rate mortgage. If the loan carried a three-year prepayment penalty requiring the borrower to pay six months’ worth of interest at the much higher reset rate of 3 percentage points over the prevailing market rate, Countrywide would pay the broker a $30,000 commission.

When borrowers tried to reduce their mortgage debt, Countrywide cashed in: prepayment penalties generated significant revenue for the company — $268 million last year, up from $212 million in 2005. When borrowers had difficulty making payments, Countrywide cashed in again: late charges produced even more in 2006 — some $285 million.

The company’s incentive system also encouraged brokers and sales representatives to move borrowers into the subprime category, even if their financial position meant that they belonged higher up the loan spectrum. Brokers who peddled subprime loans received commissions of 0.50 percent of the loan’s value, versus 0.20 percent on loans one step up the quality ladder, known as Alternate-A, former brokers said. For years, a software system in Countrywide’s subprime unit that sales representatives used to calculate the loan type that a borrower qualified for did not allow the input of a borrower’s cash reserves, a former employee said.

A borrower who has more assets poses less risk to a lender, and will typically get a better rate on a loan as a result. But, this sales representative said, Countrywide’s software prevented the input of cash reserves so borrowers would have to be pitched on pricier loans. It was not until last September that the company changed this practice, as part of what was called in an internal memo the “Do the Right Thing” campaign.

According to the former sales representative, Countrywide’s big subprime unit also avoided offering borrowers Federal Housing Administration loans, which are backed by the United States government and are less risky. But these loans, well suited to low-income or first-time home buyers, do not generate the high fees that Countrywide encouraged its sales force to pursue.

A few weeks ago, the former sales representative priced a $275,000 loan with a 30-year term and a fixed rate for a borrower putting down 10 percent, with fully documented income, and a credit score of 620. While a F.H.A. loan on the same terms would have carried a 7 percent rate and 0.125 percentage points, Countrywide’s subprime loan for the same borrower carried a rate of 9.875 percent and three additional percentage points.

The monthly payment on the F.H.A. loan would have been $1,829, while Countrywide’s subprime loan generated a $2,387 monthly payment. That amounts to a difference of $558 a month, or $6,696 a year — no small sum for a low-income homeowner.

“F.H.A. loans are the best source of financing for low-income borrowers,” the former sales representative said. So Countrywide’s subprime lending program “is not living up to the promise of providing the best loan programs to its clients,” he said.

Mr. Simon of Countrywide said that Federal Housing Administration loans were becoming a bigger part of the company’s business.

“While they are very useful to some borrowers, F.H.A./V.A. mortgages are extremely difficult to originate in markets with above-average home prices, because the maximum loan amount is so low,” he said. “Countrywide believes F.H.A./V.A. loans are an increasingly important part of its product menu, particularly for the homeownership hopes of low- to moderate-income and minority borrowers we have concentrated on reaching and serving.”

WORKDAYS at Countrywide’s mortgage lending units centered on an intense telemarketing effort, former employees said. It involved chasing down sales leads and hewing to carefully prepared scripts during telephone calls with prospects.

One marketing manual used in Countrywide’s subprime unit during 2005, for example, walks sales representatives through the steps of a successful call. “Step 3, Borrower Information, is where the Account Executive gets on the Oasis of Rapport,” the manual states. “The Oasis of Rapport is the time spent with the client building rapport and gathering information. At this point in the sales cycle, rates, points, and fees are not discussed. The immediate objective is for the Account Executive to get to know the client and look for points of common interest. Use first names with clients as it facilitates a friendly, helpful tone.”

If clients proved to be uninterested, the script provided ways for sales representatives to be more persuasive. Account executives encountering prospective customers who said their mortgage had been paid off, for instance, were advised to ask about a home equity loan. “Don’t you want the equity in your home to work for you?” the script said. “You can use your equity for your advantage and pay bills or get cash out. How does that sound?”

Other documents from the subprime unit also show that Countrywide was willing to underwrite loans that left little disposable income for borrowers’ food, clothing and other living expenses. A different manual states that loans could be written for borrowers even if, in a family of four, they had just $1,000 in disposable income after paying their mortgage bill. A loan to a single borrower could be made even if the person had just $550 left each month to live on, the manual said.

Independent brokers who have worked with Countrywide also say the company does not provide records of their compensation to the Internal Revenue Service on a Form 1099, as the law requires. These brokers say that all other home lenders they have worked with submitted 1099s disclosing income earned from their associations.

One broker who worked with Countrywide for seven years said she never got a 1099.

“When I got ready to do my first year’s taxes I had received 1099s from everybody but Countrywide,” she said. “I called my rep and he said, ‘We’re too big. There’s too many. We don’t do it.’ ”

A different broker supplied an e-mail message from a Countrywide official stating that it was not company practice to submit 1099s. It is unclear why Countrywide apparently chooses not to provide the documents. Countrywide boasts that it is the No. 1 lender to minorities, providing those borrowers with their piece of the American homeownership dream. But it has run into problems with state regulators in New York, who contended that the company overcharged such borrowers for loans. Last December, Countrywide struck an agreement with Eliot Spitzer, then the state attorney general, to compensate black and Latino borrowers to whom it had improperly given high-cost loans in 2004. Under the agreement, Countrywide, which cooperated with the attorney general, agreed to improve its fair-lending monitoring activities and set up a $3 million consumer education program.

But few borrowers of any sort, even the most creditworthy, appear to escape Countrywide’s fee machine. When borrowers close on their loans, they pay fees for flood and tax certifications, appraisals, document preparation, even charges associated with e-mailing documents or using FedEx to send or receive paperwork, according to Countrywide documents. It’s a big business: During the last 12 months, Countrywide did 3.5 million flood certifications, conducted 10.8 million credit checks and 1.3 million appraisals, its filings show. Many of the fees go to its loan closing services subsidiary, LandSafe Inc.

According to dozens of loan documents, LandSafe routinely charges tax service fees of $60, far above what other lenders charge, for information about any outstanding tax obligations of the borrowers. Credit checks can cost $36 at LandSafe, double what others levy. Some Countrywide loans even included fees of $100 to e-mail documents or $45 to ship them overnight. LandSafe also charges borrowers $26 for flood certifications, for which other companies typically charge $12 to $14, according to sales representatives and brokers familiar with the fees.

LAST April, Countrywide customers in Los Angeles filed suit against the company in California state court, contending that it overcharged borrowers by collecting unearned fees in relation to tax service fees and flood certification charges. These markups were not disclosed to borrowers, the lawsuit said.

Appraisals are another profit center for Countrywide, brokers said, because it often requires more than one appraisal on properties, especially if borrowers initially choose not to use the company’s own internal firm. Appraisal fees at Countrywide totaled $137 million in 2006, up from $110 million in the previous year. Credit report fees were $74 million last year, down slightly from 2005.

All of those fees may soon be part of what Countrywide comes to consider the good old days. The mortgage market has cooled, and so have the company’s fortunes. Mr. Mozilo remains undaunted, however.

In an interview with CNBC on Thursday, he conceded that Countrywide’s balance sheet had to be strengthened. “But at the end of the day we could be doing very substantial volumes for high-quality loans,” he said, “because there is nobody else in town.”

So are many people like yourself… check out this article from the Wall Street Journal online and what recommendations they make.  http://online.wsj.com/article/SB118903997029818836.html?mod=googlenews_wsj

OR- EVEN BETTER- CALL ESOP!!  ESOP has fair lending agreements with national lenders and servicers that cover 65% of the lending done in the Cleveland area.

Please call us if your loan is being serviced/ held by any of these lenders:

Third Federal Savings and Loan

Ocwen

Litton Loan Servicing

Option One

Select Portfolio Servicing (SPS)/ Fairbanks

Ameriquest/ Argent/ ACC Capital Holdings

Citi Financial

 Homecomings

JP Morgan/ Chase

Countrywide Home Loans

Wilshire

Wells Fargo/ American Servicing Company

Interesting that Countrywide is trying to save homes by making more people homeless… 

ESOP has an 85% success rate on getting loan workouts from the lenders they have fair lending agreements with… Countrywide refuses to sign a fair lending agreement with ESOP and of the 130 borrowers ESOP has presented to Countrywide, only 2 have received reasonable workout plans- that’s a 1.8% success rate on keeping people in their homes!!  

Typical Countrywide workouts include unaffordable repayment plans, fees up to and above $10,000 added to the principal balance, investors “refusing to allow modifications” that would make adjustable rates fixed. 

Countrywide’s PR campaign tells homeowners they will work with borrowers to keep them in their homes… but the evidence proves differently.

AP
Countrywide to Cut Up to 12,000 Jobs
Friday September 7, 9:07 pm ET
By Alex Veiga, AP Business Writer

Countrywide to Cut Up to 12,000 Jobs in Bid to Slash Costs and Cope With Soaring Foreclosures

LOS ANGELES (AP) — Struggling mortgage lender Countrywide Financial Corp. will cut as many as 12,000 jobs in a bid to slash costs and cope with soaring foreclosures and defaults, the company said Friday.The cuts, amounting to as much as 20 percent of its work force, are needed because the company expects new mortgages to fall about 25 percent in 2008 from this year’s levels, Countrywide said.

In a letter distributed to employees, Countrywide Chief Executive Angelo Mozilo called the current market cycle “the most severe in the contemporary history of our industry.”

“During the past two years the growth in home price appreciation has stopped dead in its tracks and in many areas of the country it has turned in the wrong direction,” Mozilo said in the letter.

In recent weeks, Countrywide borrowed $11.5 billion and sold a $2 billion stake to Bank of America so it could keep operating its retail banking and mortgage lending businesses.

The job cuts planned during the next three months are expected to center primarily on the company’s production divisions and its general and administrative support areas.

Actual reductions could be lower if interest rates and other market conditions improve, Countrywide said.

The latest cuts followed the elimination of about 900 positions earlier this week and 500 others last month.

The Calabasas-based company employed more than 61,000 people as of July 31, with about 34,000 working in loan production.

Earlier Friday, IndyMac Bancorp Inc. announced plans to eliminate as many as 1,000 jobs, citing difficulties from the mortgage lending and housing market downturns.

The Pasadena, Calif.-based mortgage lender and bank said it expects its loan production volume to decline by roughly half in the fourth quarter.

Countrywide said it intends to keep transferring its residential lending business into its Countrywide Bank unit as a way to strengthen its access to funding.

Almost all of its residential lending activity will be originated through the bank by the end of this month, the company said.

Countrywide has also shifted its loan production guidelines and now only makes loans that can be sold on the secondary market to government-backed enterprises such as Fannie Mae or Freddie Mac or that qualify under investment requirements for its banking unit.

Countrywide has been struggling as the housing slump led to a sharp rise in mortgage defaults and foreclosures, particularly among borrowers with subprime loans.

The mortgage fallout has left many lenders strapped for money to fund new loans.

Lenders that relied on selling loans on the secondary market to fund their operations have been particularly hard hit, with dozens going out of business or forced into bankruptcy this year.

That has resulted in tens of thousands of jobs being lost industrywide.

Like other lenders, Countrywide has tightened its credit guidelines and stopped selling some types of adjustable rate loans.

In the letter to employees, Mozilo outlined additional steps the company is taking to shore up its operations.

Among the changes, the company is consolidating its sales force and plans to keep targeting borrowers who now have adjustable rate subprime loans with offers to refinance with prime loans that carry more stable payments.

Mozilo noted some 75 percent of the company’s Full Spectrum Lending Division’s loans this year have been prime loans, many sold to borrowers who refinanced from subprime loans.

Despite the layoffs, Mozilo said in the letter that Countrywide’s consumer markets division would keep expanding its sales force.

Last month, the division hired nearly 1,000 sales people, a record for the unit, he said.

“As we carry out our plan, the company’s overarching focus is exactly where it has always been: to remain an industry leader in the U.S. residential lending business,” Mozilo said in a prepared statement issued to the media.

The company declined further comment.

Countrywide shares fell 27 cents to $18.21 on Friday. In after-market trading, shares rose to $18.48. Shares of IndyMac fell 25 cents, or 1.1 percent, to $21.41.

MEDIA RELEASEFor Immediate Release, June 20, 2007Contact : Jenelle Dame, 216-361-0718 (office)jenelle@esop-cleveland.org COMMUNITY LEADERS WIN MEETING WITH PREDATORY LENDER: COUNTRYWIDE HOME LOANS ESOP’s community leaders and Countrywide Home Loan borrowers to meet with Loss Mitigation VP’s about their loans on June 20, 6pm at 3631 Perkins.  

Empowering and Strengthening Ohio’s People (ESOP) has been working with Countrywide borrowers to resolve issues with their mortgage holder, Countrywide Home Loans, as well as to win a meeting with their Loss Mitigation VP’s.  After delivering hundreds of plastic sharks to a Countrywide branch in Woodmere, Angelo Mozilo, Countrywide’s CEO, instructed Michael Gross, Director of Mortgage Servicing, and Jerry Durham, VP of Home Ownership Preservation, to meet with ESOP borrowers to discuss concerns related to the servicing of their loans.

According to 2005 Home Mortgage Disclosure Act (HMDA) data, Countrywide was the third largest lender in Cleveland. Despite claiming that sub-prime lending is a very small part of its portfolio, a full 21% of those loans were classified as “High Cost”. More importantly, the vast majority of those loans were made in minority census tracts.

“Countrywide is targeting low income and minority communities,” said ESOP’s president, Inez Killingsworth.

Countrywide is notorious for bad customer service, subprime lending, and borderline predatory lending practices.  At 6pm on June 20^th at ESOP’s 3631 Perkins office, borrowers will have their chance to tell the lender what they think about their lending practices, as well as take steps towards resolving their mortgage issues. 

ESOP is a community organization that uses community organizing to hold lenders and loan servicers accountable for their abusive practices. ESOP is a member of Community Shares.

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Campaign Goal: To stop this predatory lender from screwing communities by signing a fair lending agreement with grassroots community group, ESOP