Countrywide Admits to Puffery in Advertising

Interesting admission from Countrywide regarding those claims of working to modify loans for homeowners. From MSNBC:

In marketing, advertising and testimony before Congress, Countrywide Home Loans has said repeatedly that it is working hard to modify the mortgages of financially strapped borrowers caught up in the subprime meltdown. But in a New Hampshire court, attorneys for the lending giant are singing a different tune, describing such assurances as “mere commercial puffery.”

Saying the modification offers are “only Countrywide’s vague advertisements,” attorneys for the lender are asking the court to throw out a lawsuit alleging breach of good faith, fraud, negligence and misrepresentation, which was filed on behalf of a family that was refused a loan modification by the California-based company.

Candor is much need these days.

Senator Receives Preferential Treatment From Countrywide

Senator Kent Conrad admits he wasn’t aware that Countrywide gave him preferential treatment on his mortgage and donated the equivalent fee to a charity. Senator Christopher Dodd on the other hand also got a loan from Countrywide but denies he was treated any differently. I don’t know if I buy that necessarily. Shame on Countrywide for treating these powerful senators differently than the regular borrower. It only hurts the industry when big companies try to pull this kind of shenanigan.

Now why is this significatn you ask? Well because these two Senators sit on the Senate Banking Committe, and Dodd is in fact the chairman. This committee has been actively seeking ways to regulate the mortgage industry since early last year.

Now, if I were a Senator on this committee, I’d highly recommend not doing any Real Estate transaction until the credit crunch is fully behind us and any legislation has been dealt with. Or, just doing a cash purchase if you must delve into the market.

Here is the story from Bloomberg:

June 14 (Bloomberg) — Senator Kent Conrad said he was given preferential treatment on a mortgage from Countrywide Financial Corp. and will write a $10,500 check to charity.

“It appears Countrywide waived one point on my mortgage,” Conrad, a North Dakota Democrat, said in a statement today in Washington. “Although I did not ask for or know that I was receiving a discount, and even though I was offered a competitive loan from another lender, I do not want to have received preferential treatment.”

Conrad said he also received a loan from Countrywide on an eight-unit apartment building in Bismarck, North Dakota, even though the lender typically serves properties that have four units or less. He said he had decided to refinance that loan with another institution.

Conrad and Senator Christopher Dodd, who oversees the U.S. mortgage industry as chairman of the Senate Banking Committee, were among those who received loans through Countrywide’s “V.I.P.” program, which waived points, fees and borrowing rules for prominent people, Portfolio magazine reported June 12. Dodd has denied receiving preferential treatment.

Full story here.

Bank of America Buys Countrywide

Bank of America is buying Countrywide. I guess we should have seen this coming considering how Bank of America had been posting “bail” for Countrywide for quite a few months. From MarketWatch:

NEW YORK (MarketWatch) — Bank of America Corp. said Friday it’s purchasing Countrywide Financial Corp. for $4 billion, effectively doubling down on a previous investment in the troubled firm and catapulting the buyer into the top spot among mortgage lenders and loan servicers in the U.S.

The stock-swap deal will put an end to the independence of the troubled California lender headed by Angelo Mozilo, and represents an increase from the Charlotte, N.C., bank’s August investment of about $2 billion.

There were rumors earlier this week that Countrywide was running out of cash.

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