Wednesday, August 22, 2007
I have long hated this mortgage product. I am a big proponent of getting an old fashioned fixed rate. I completely understand the purpose of this loan structure, but in no way did the 12% of people that did them last year really understand the product. We usually see people get the picture about a year in when the balance has skyrocketed. Unfortunately, the NEGAM is the payment they could afford not the interest only. In addition, with the financial engineering in these products people buy the idea of the NEGAM payment and don't notice the high note rate which is the real interest rate that the borrower is charged. This product is being eliminated at lenders/banks daily. The real concern for people with these is that they get out from under them and into a safer loan product. Cheers and don't let the video spoil your dinner. From our friends at:http://armcrash.com/
Countrywide and BOA are competitors across a variety of business segments. It came as a surprise to the markets that Bank of America had agreed to buy $2b dollars worth of Countrywide preferred stock. Countrywide shares rose sharply in afterhours trading, the perception is that this is the start of a move to merge the companies together. Bank of America is not a star in terms of mortgage origination. Countrywide needs a source of cheap funds and BOA has an enormous pool of savings and CD account money to tap into. On the surface it looks like a great merger. But, I think the real issue of concern is that Countrywide is going around Wall St with cap in hand to raise any money that is available. As of now the terms of the preferred stock deal are not known but this wasn't cheap money so it makes you wonder if the giant Countrywide is going to fall into another banks arms or just fall apart. Heard any news, rumors about Countrywide? Post a comment.