Comments on: Countrywide Eliminates Interest Only Qualification

By: Changing Mortgage criteria | easyclickhomes.com

Changing Mortgage criteria | easyclickhomes.com — Sat, 17 Nov 2007 10:06:13 +0000

[...] refinancing the loans they recived. This just got harder. As reported by Blownmortgage.com, Countrywide and WaMu have changed their tones as far as who can get loans. At Countrywide, requirements to [...]

By: Tike

Tike — Fri, 16 Nov 2007 20:40:52 +0000

But banks and thrifts are bound by the guidance regardless of whether they securitize the loans or not. I wonder how CFC got around the rule with the regulators.

By: S Hallman

S Hallman — Fri, 16 Nov 2007 14:36:50 +0000

Tike – I have investors that still qualify at the I/O payment

By: Fielding Mellish

Fielding Mellish — Fri, 16 Nov 2007 03:09:57 +0000

I agree wholly with Tike. I guess Countrywide’s definition of “guidance” is: someting that will encumber our competitors but that we feel totally free to ingore.

By: Tike

Tike — Fri, 16 Nov 2007 01:34:08 +0000

Wasn’t the nontraditional guidance for IO and option arms passed last year? How were they getting away with not qualifying people at the fully amortized fully indexed rate?

Its amazing the limits these guys push, it is more amazing that they get away with it.

By: Brian

Brian — Thu, 15 Nov 2007 23:36:46 +0000

To continue – even a fixed I/O is effectively a lease, not truly a purchase of the home and only appreciation will give them enough equity to eventually sell for a complete wash. After a few years of paying the interest and seeing no appreciation, they will be as likely to default as they are now. Especially if we continue to see slow grinding depreciation (a more likely scenario). People tire of slowly going upside down.

Without some payment of principal, they have little to lose by an eventual default.

In other words: Renting (via an I/O in a flat or decreasing market) is just throwing money away.

By: Brian

Brian — Thu, 15 Nov 2007 23:30:50 +0000

This may “eliminate” a refi option for people who are in over their heads, but so?

If the only way they can stay in the house is to get another I/O loan that will likely put them back in this position after it resets then why do it? One last roll of the dice and hope that the price appreciation starts up again?

I am not one that thinks that hair of the dog is an appropriate cure.