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According to our account resources, Countrywide Home Loans will eliminate all subprime ARM loan products tomorrow for their wholesale partners; leaving only the 15, 20 and 30-year fixed mortgage products available for brokers. This follows on the heals of Angelo Mozilo’s statement that Countrywide is “out of subprime” and marks a massive 180 from an industry built on short-term adjustable rate mortgages for people with less-than-perfect credit histories.
This change eliminates the remaining ARM products such as the 5-year, 7-year and 10-year fixed ARMs that were available after the company moved (along with the rest of the industry) a couple of months ago to eliminate the short-term 2-year and 3-year ARMs that made up the majority of loans written in the subprime market for 2005 & 2006.
This change affects the wholesale channel on the subprime side only - no word if it affects the Full Spectrum retail arm of Countrywide. It’s just another sign of the ongoing atrophy of the wholesale origination market and a clear symptom of capital markets investors fear of short-term subprime mortgages.
This is just a wild guess - but those 30-year rates are going to suck, big time.
I am just a small time banker and I do not claim to know everything about managing a lender. My question to anyone that may now is this - why would countrywide even keep FSL or SLG in existence? They cannot move the paper, Countrywide bank does not want to house that crap, and it would not help their abiltiy to get a good deal from a buyer. You would have to think that they are just bleeding from the throat every minute they are open, right?
I know we get a lot of emotional comments here, but can anyone give me an actual plan that Countrywide has to survive other than “we are the biggest and baddest in the land”?
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