Countrywide Foreclosures - Countrywide Foreclosure homes - Countrywide REO houses

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The biggest American bank - the Bank of America is found in Charlotte, N.C.. Almost everybody have heard about Countrywide Financial - the organization that got a loan of around 4 billions dollars, and finally became a reason for a mortgage crisis.

Exactly the Bank of America financed this loan for Countrywide Financial. As Countrywide Financial failed to pay back, Bank of America became the biggest foreclosure lender in the country. Both sides had their own advantages in this purchase operation - on one hand Countrywide avoided the total financial collapse, on the other hand Bank of America improved its positions on market.

We have to underline, that this operation let the BofA have its own part in 25% of home loans in the United States. This case is only one example out of thousands of cases, when bank gets huge advantages after dealing with trouble lenders. Such kind of loans are also known as subprime loans, of course this situation attracted a lot of attention, all owners of subprime loans were checked. Normally as a source of money for mortgages banks use the money saved on deposit accounts by clients. But Countrywide Financial acts in different way, it takes loans on the Wall Street, so it gets amount of money enough to invest it in mortgages, and finally sell these loans on foreclosure market. These transactions are repeated again and again, which gives a chance the parts get their profit. This scenario worked without problems until we faced the mortgage crisis. Countrywide Financial got under the control of Bank of America, more over the BofA got under its control over 5800 branches located in 31 different states in US.

Also Bank of America possesses 700 loan offices and 200 banking centers located all over the United States of America. Taking into consideration that a lot of borrowers loose their homes at the end, this acquisition is highly profitable operation for Countrywide Financial executives. The activity which BofA is planning to undertake now will give a possibility around 260 thousand borrowers with bed debts keep their houses. it will happen after modifying more then 40 billion US dollars of mortgages. All this is supposed to to be held during the following two years. A great amount of borrowers with bad debts leads to increase of Countrywide REO homes number.

Post foreclosures (REO)

REO property or real estate owned property belongs to banks. How does it happen that banks own a real estate? Well, it is easy to understand: bank gives a loan, so mortgage appears, if client cant pay his dept and if there are no ways to stop foreclosure, the house becomes the property of financial organization. It may seem that foreclosures can’t bring high profits as bank want to sell it offering the price which will at least cover the amount of the first loan. On the other hand, if you will be more attentive, you will see some ways to benefit greatly from buying a foreclosure house.

It may be the situation, when more then one loan is secured to the real estate; actually it happens quite often nowadays. In case second lender doesn’t make payments to the first lender and starts own foreclosure procedure, in this case the second lender is not part of foreclosure process any more. That is the main reason why plenty of second mortgages are valued around 20% less then the normal market price.

Bank doesn’t benefit from being an owner of a house; it needs money to flow constantly to get higher net profit. More over keeping a foreclosure as an asset may cause additional expenses. That is why bank wants to sell this burden as soon as possible, and it is likely to accept even not high price, just to cover the dept.