From Countrywide’s former Senior VP of Marketing, the first engrossing inside look at Countrywide Home Loans, how the mortgage crisis started-and where it may end.

In July 2004, Adam Michaelson entered “The Vault”-an underground bunker at Countrywide headquarters-for a meeting about a new loan product that would allow borrowers to pay less than their minimum monthly payment. After the “finance jocks” proudly made their case, Michaelson asked one question: “Are you nuts?” Countrywide’s dec

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List Price: $ 25.95

Price: $ 3.54

Time and time again, I see Countrywide Home Loans (CHL) listing their Real Estate Owned (REO) properties on our local MLS and requiring buyers to get pre-approved with a Countrywide Retail Loan Officer prior to submission of their offer. In fact, in their required addendums, it is specifically noted:

If the Agreement is contingent on financing, as a sales condition, Buyer must obtain a pre-approval letter from a branch office of Countrywide Home Loans, Inc. (“CHL”) for a mortgage loan in an amount and under terms sufficient for Buyer to perform its obligations under the Agreement, and such letter must accompany the Agreement. The pre-approval shall include, but is not limited to, the pre-approval letter, a satisfactory credit report, and proof of funds sufficient to meet Buyer’s obligations under the Agreement. Buyer’s submission of proof of pre-approval is a condition precedent to Seller’s acceptance of Buyer’s offer. Seller may require Buyer to obtain, at no cost to Buyer, loan pre-approval as Seller may direct. Notwithstanding any Seller required pre-approval, Buyer is not required to obtain financing from CHL or Seller- Buyer may obtain financing from any source. As an incentive for the Buyer to obtain financing from CHL, CHL will offer a free appraisal and a free credit report if the Buyer finances and closes the purchase of the Property through financing from CHL.

This is ludicrously stupid for the following reasons (not a complete list):

+Most buyers are pre-approved early in the home search process and have already chosen a lender they are comfortable with and are ready to buy NOW.

+Most buyers do not want to share private information with a stranger.

+Most buyers have no intention of working with the Countrywide Loan Officer.

+Countrywide pulls credit, meaning another inquiry on buyer’s credit report.

+Countrywide’s lending capabilities (product options) have been dramatically reduced since they are doing mostly/only loans that Fannie Mae or Freddie Mac will buy.

+Agents have existing relationships with loan officers that they know, trust, and can count on… they don’t like to have an ultimatium put to them any more than a buyer and don’t like interference in their client relationship.

+Agents often have such a long list of potential homes to show that they need to find reasons to eliminate some… this is an obvious candidate for removal.

+Countrywide doesn’t care who the approval is from or how solid the buyer is… if they are using financing, they HAVE TO get a pre-approval from Countrywide Retail. Period.

+Offering to do a free appraisal on a home that they own is akin to having the fox guard the hen house simply because he’ll do it for free… where’s the buyer’s protection when the seller is the loan originator?

+And finally- buyers are not stupid and they know when they’re being jerked around. With so much inventory on the market, they can choose to tell Countrywide to keep their property and they’ll go find someone else who won’t treat them like a fool.

According to the Countrywide Foreclosure Blog, Countrywide had 14,442 REO homes listed on their site as of 12/5/07 at a total asking price of just over Billion. With so much inventory, so much competition, such a difficult buyer market, and tough times keeping Countrywide financially afloat, you would think that they would want to do everything they could to get their properties sold!

Recently I have seen several of Countrywide’s properties in the 0,000 range price reduced ,000 and ,000 all at once. Such drastic price reductions have generated interest in the properties but also shows the motivation, and possibly desperation, of Countrywide to get these houses off their books. If they eliminated their pre-approval requirement, they might see more interest from qualified buyers without having to so drastically reduce prices.

Some people suggest that Countrywide requiring a pre-approval is smart business, that it gives them an opportunity to pick up the buyer’s mortgage. I would be surprised if they had more than a 20% capture rate on these leads (but I have no knowledgewhat their capture rate is), and the added holding costs for longer sale, disinterested buyers, and further price reductions make me think that this is a losing battle for them.

Message to Countrywide: eliminate your CHL pre-approval requirement. You’ll sell more houses, sell them faster, and likely at a higher price.

Best answer:

Answer by tax_man_cometh
me too.

What do you think? Answer below!

Copy of addendum:
BUYER (Initials)________________ – 1 -
SELLER (Initials)_______________
Revised 3/06
REO #____________________
Countrywide Home Loans, Inc.
REAL ESTATE PURCHASE ADDENDUM
This Real Estate Purchase Addendum (“Addendum”) is to be made part of, and incorporated into, the Real Estate Purchase
Contract dated ___________________________ (“Contract”) between
(“Seller” and the term “Seller” shall also include Countrywide Home Loans, Inc.) and
(“Buyer”) for the property and
improvements located at the following address:
(“Property”). Buyer and Seller may each be referred to herein as a “Party” and collectively as the “Parties.”
The Contract and this Addendum together constitute the “Agreement”.
The Seller and the Buyer agree as follows:
1. LIMITATION OF SELLER’S LIABILITY AND BUYER’S WAIVER OF IMPORTANT RIGHTS:
BUYER UNDERSTANDS AND ACKNOWLEDGES THAT SELLER HAS ACQUIRED THE PROPERTY
THROUGH FORECLOSURE, DEED-IN-LIEU OF FORECLOSURE, OR SIMILAR PROCESS, SELLER
HAS NEVER OCCUPIED THE PROPERTY, AND SELLER HAS LITTLE OR NO DIRECT KNOWLEDGE
ABOUT THE CONDITION OF THE PROPERTY. BUYER AGREES THAT BUYER IS BUYING THE
PROPERTY “AS IS” (AS MORE FULLY SET FORTH IN SECTION 13 OF THIS ADDENDUM).
NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN THE AGREEMENT, SELLER’S
LIABILITY AND BUYER’S SOLE AND EXCLUSIVE REMEDY IN ALL CIRCUMSTANCES AND FOR
ALL CLAIMS (AS THE TERM IS DEFINED IN SECTION 26 OF THIS ADDENDUM, AND ALL
REFERENCES IN THIS ADDENDUM TO “CLAIMS,” “CLAIM,” “Claims,” or “Claim” SHALL HAVE
SUCH MEANING) ARISING OUT OF OR RELATING IN ANY WAY TO THE AGREEMENT OR THE
SALE OF THE PROPERTY TO BUYER INCLUDING, BUT NOT LIMITED TO, SELLER’S BREACH OR
TERMINATION OF THE AGREEMENT, THE CONDITION OF THE PROPERTY, SELLER’S TITLE TO
THE PROPERTY, THE OCCUPANCY STATUS OF THE PROPERTY, THE SIZE, SQUARE FOOTAGE,
BOUNDARIES, OR LOCATION OF THE PROPERTY, ANY COST OR EXPENSE INCURRED BY
BUYER IN SELLING A CURRENT OR PRIOR RESIDENCE OR TERMINATING A LEASE ON A
CURRENT OR PRIOR RESIDENCE, OBTAINING OTHER LIVING ACCOMMODATIONS, MOVING,
STORAGE OR RELOCATION EXPENSES, OR ANY OTHER COSTS OR EXPENSES INCURRED BY
BUYER IN CONNECTION WITH THE AGREEMENT SHALL BE LIMITED TO NO MORE THAN:
(A) A RETURN OF BUYER’S EARNEST MONEY DEPOSIT IF THE SALE TO BUYER DOES NOT
CLOSE; AND
(B) THE LESSER OF BUYER’S ACTUAL DAMAGES OR ,000.00 IF THE SALE TO BUYER CLOSES.
BUYER SHALL NOT BE ENTITLED TO A RETURN OF BUYER’S EARNEST MONEY DEPOSIT IF
BUYER MATERIALLY BREACHES THE AGREEMENT.
BUYER AGREES THAT SELLER SHALL NOT BE LIABLE TO BUYER UNDER ANY
CIRCUMSTANCES FOR ANY SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES
WHATSOEVER, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT
LIABILITY), OR ANY OTHER LEGAL OR EQUITABLE PRINCIPLE, THEORY, OR CAUSE OF
BUYER (Initials)________________ – 2 -
SELLER (Initials)_______________
Revised 3/06
ACTION ARISING OUT OF OR RELATED IN ANY WAY TO ANY CLAIM, INCLUDING, BUT NOT
LIMITED TO, THE AFOREMENTIONED CLAIMS.
ANY REFERENCE TO A RETURN OF THE BUYER’S EARNEST MONEY DEPOSIT CONTAINED IN
THE AGREEMENT SHALL MEAN A RETURN OF THE EARNEST MONEY DEPOSIT, LESS ANY
ESCROW CANCELLATION FEES APPLICABLE TO THE BUYER UNDER THE AGREEMENT AND
LESS FEES AND COSTS PAYABLE FOR SERVICES AND PRODUCTS PROVIDED DURING ESCROW
AT THE BUYER’S REQUEST. TO THE FULLEST EXTENT PERMITTED BY LAW THE BUYER
WAIVES ANY CLAIMS THAT THE PROPERTY IS UNIQUE AND THE BUYER ACKNOWLEDGES
THAT A RETURN OF ITS EARNEST MONEY DEPOSIT CAN ADEQUATELY AND FAIRLY
COMPENSATE THE BUYER FOR ALL CLAIMS. UPON RETURN OF THE EARNEST MONEY
DEPOSIT TO THE BUYER, THE AGREEMENT SHALL BE TERMINATED, AND THE BUYER AND
THE SELLER SHALL HAVE NO FURTHER LIABILITY, OBLIGATION, OR RESPONSIBILITY TO
EACH OTHER IN CONNECTION WITH THE AGREEMENT. IF THE SALE TO BUYER CLOSES AND
SELLER COMPENSATES BUYER AS PROVIDED ABOVE FOR BUYER’S ACTUAL DAMAGES, IF
ANY, THEN THE BUYER AND THE SELLER SHALL HAVE NO FURTHER LIABILITY,
OBLIGATION, OR RESPONSIBILITY TO EACH OTHER IN CONNECTION WITH THE
AGREEMENT.
SELLER’S LIMITATION OF LIABILITY AND BUYER’S WAIVERS PROVIDED IN THE AGREEMENT
ARE A MATERIAL PART OF THE CONSIDERATION TO BE RECEIVED BY THE SELLER UNDER
THE AGREEMENT AS NEGOTIATED AND AGREED TO BY THE BUYER AND THE SELLER.
THE BUYER FURTHER WAIVES THE FOLLOWING, TO THE FULLEST EXTENT PERMITTED BY
LAW:
(A) ALL RIGHTS TO FILE AND MAINTAIN AN ACTION AGAINST THE SELLER FOR SPECIFIC
PERFORMANCE;
(B) RIGHT TO
Looks just like this: http://www.placercountyhomesandland.net/files/countrywide_real_estate_purchase_addendum.pdf

This is a generic copy I found, but it is the same exact one I was given. We are getting FHA loan and they accepted our offer on the house… and then sent the addendum. On one part it says we waive the right to stop sell of property due to condition, structure, etc. On another it says we have 10 days to get inspection? Does this mean we can’t get out of contract even if the inspection turns out bad? I just got this paper today (saturday) and they said they have the have it back by Monday – the first day I could possibly get an inspection done when the utilities won’t even be turned on yet. WHAT TO DO?

Best answer:

Answer by src50
Aren’t you using a realtor? He/she should be advising you.

Give your answer to this question below!

Best answer:

Answer by ronidl76
If it has already been auctioned back, they can evict him without notice. Really, how much more time does he need? He’s been there for free throughout the whole process. At least 3 months of no mortgage, and another month or longer of auctioning it.

Know better? Leave your own answer in the comments!