Comments on: Countrywide Says It Will Modify Up to $16 Billion in Loans http://www.nakedcapitalism.com/2007/10/countrywide-says-it-will-modify-up-to.html Sun, 22 Nov 2009 00:22:06 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: gaius marius http://www.nakedcapitalism.com/2007/10/countrywide-says-it-will-modify-up-to.html#comment-1218 gaius marius Wed, 24 Oct 2007 04:02:00 +0000 http://www.nakedcapitalism.com/2007/10/countrywide-says-it-will-modify-up-to-16-billion-in-loans/#comment-1218 could <a HREF="http://www.cnbc.com/id/21435367" REL="nofollow">this</a> explain cfc's motives? -- <i>"it has to do with the fact that recoveries on subprime loans are far worse than ever anticipated so far."</i><br/><br/>if so, it seems to me that the problem is even worse than commonly imagined. could this explain cfc’s motives? — “it has to do with the fact that recoveries on subprime loans are far worse than ever anticipated so far.”

if so, it seems to me that the problem is even worse than commonly imagined.

]]> By: Yves Smith http://www.nakedcapitalism.com/2007/10/countrywide-says-it-will-modify-up-to.html#comment-1217 Yves Smith Wed, 24 Oct 2007 03:04:00 +0000 http://www.nakedcapitalism.com/2007/10/countrywide-says-it-will-modify-up-to-16-billion-in-loans/#comment-1217 You are correct that any mortgage servicer is restricted in what it can do by the servicing agreement, and by the fact that under the servicing agreement, its responsibility is <i>only</i> to the investors. However, past experience has shown it is often better for the investor to keep the borrower alive if he can make payments than to foreclose.<br/><br/>Some servicing agreements prohibit mods entirely; some limit them to a certain level; others give the servicer freedom to enter into mods that aren't effectively refinancings (you don't want servicers encouraging borrowers to refinance in a falling interest rate environment).<br/><br/>I don't know what restrictions CFC puts in its servicing agreements and how often they have been renegotiated by issuers. <br/><br/>Given CFC;s past behavior, I am skeptical as to CFC's motives. I suspect this is more a PR ploy than a serious effort. You are correct that any mortgage servicer is restricted in what it can do by the servicing agreement, and by the fact that under the servicing agreement, its responsibility is only to the investors. However, past experience has shown it is often better for the investor to keep the borrower alive if he can make payments than to foreclose.

Some servicing agreements prohibit mods entirely; some limit them to a certain level; others give the servicer freedom to enter into mods that aren’t effectively refinancings (you don’t want servicers encouraging borrowers to refinance in a falling interest rate environment).

I don’t know what restrictions CFC puts in its servicing agreements and how often they have been renegotiated by issuers.

Given CFC;s past behavior, I am skeptical as to CFC’s motives. I suspect this is more a PR ploy than a serious effort.

]]> By: Anonymous http://www.nakedcapitalism.com/2007/10/countrywide-says-it-will-modify-up-to.html#comment-1216 Anonymous Wed, 24 Oct 2007 01:42:00 +0000 http://www.nakedcapitalism.com/2007/10/countrywide-says-it-will-modify-up-to-16-billion-in-loans/#comment-1216 How can CFC modify loans they do not own? Once they are sold in a CDO, don't the rules prohibit any modifications?<br/><br/>Yes they can change what they wown but that is a very small part of the mortgage universe. How can CFC modify loans they do not own? Once they are sold in a CDO, don’t the rules prohibit any modifications?

Yes they can change what they wown but that is a very small part of the mortgage universe.

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