Countrywide June 2006 results

[VCJIM]

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/07-13-2006/0004396194&EDATE=

It’s fascinating that Home Equity Loans in $ increased 19% YTD over 2005.

Yikes.

[powayseller]

Very interesting. But, all other categories of funding were down: pay-option, purchasing, refinancing. Why the increase in HELOCs?

[VCJIM]

Very good question. The decrease in purchasing is clearly due to decreased home sales volume (which probably has much more to do with total lent dollars than the median loan price). Maybe the refinancing craze is coming to an end? Any other ideas?

[North County Jim]

There may be a lot of folks who need HELOCs to pay the rest of their bills.

[Bugs]

I know that several deals I rejected on behalf of one of my clients for being overappraised ended up being funded at Countrywide at the (over)appraised value.

[VCJIM]

That is interesting Bugs. Perhaps Countrywide could be overexposing itself. In looking at my local market, it seems that most of the SFR sales are still for high prices, but the volume is very low. This makes me believe these sales are largely to uneducated buyers, or those moving up after selling their old house (these two groups are certainly not mutually-exclusive).

I also find it interesting that the consumer markets loan funding (in units) is down about 10%, while the dollar amount is down 5%, lending further credence that much of the market activity is at the high end (bolstering the deceptive median house price).

[powayseller]

My friend made an offer on a $185K house in South Dakota, and the appraisal came in low by $20K, for $165K. The bank found another appraiser who came in at the offer price. This is a town of 3,000 people. This appraisal shopping is going on nationwide. The bank offered to give my friend a second loan to bridge the gap between the first appraisal and the offer price, in effect giving him 100% financing. This friend has a credit score in the mid 600’s, and it would be first time home purchase. This crazy lending stuff is nationwide.

[sdappraiser]

I get the weekly NOD list from the local title company every Thursday. Number of local NODs range between 80-130 per week over the last few month, I’m not sure if the list I receive is exclusive though.

Countrywide was the lender on 20 of the 99 that came out this week. I’ve noticed this trend in the past, A LOT of Countrywide loans appear to go into default. I used to do some work for their local offices (retail) but was fired for not pushing values. It will catch up to them in the long run.

[powayseller]

From what I read, Countrywide is the loosest lender. They lowered their standars to increase their volume. They will go down the most, because of the high risks they took, risks for which they are not charging the appropriate risk premium.

[Bugs]

There’s almost nothing more frustrating to an appraiser than to painstakingly develop a reasonable appraisal only to see it funded at the higher price – obviously with a different appraisal – by another lender. Even if we have a good relationship with our client, it’s hard for them to see their competition fund the loan and make the commission without asking us why we couldn’t value it the same way.

[VCJIM]

I bet it’s terribly frustrating, especially in the recent prosperous days. However, in the coming few years they will appreciate your honesty when they realize they have fewer NODs and other repercussions.

[jameswenn]

Countrywide owns less than 5 percent of the loans they fund. They make money off the origination fees and the servicing fees from the loans they sell to investors.

[no_such_reality]

CountryWide’s HELOCs are high because Best Buy posted record 1st quarter profits due to the high demand for big screen flat panel TVs and MP3s.

People are using home equity to fund lifestyles they can’t afford.

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