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.. Everyone have heard about Countrywide Financial - the organization that received a loan of around 4 billions USD, and finally created a basics for a mortgage crisis.

Exactly the Bank of America financed this loan for Countrywide Financial. As a result of this financial operation the bank of America became an owner of the greatest consumer bank all over United States. It was successful operation - on one hand Countrywide Financial avoided the bankruptcy, on the other hand Bank of America got more power as a financial institution.

It has to be stressed out, that this operation let the BofA have its own part in 25% of home loans in the United States. The transaction described above is simply one example out of great number of cases, when financial institution wins huge advantages after creating trouble loans. These 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 operates on Wall Street as a borrower, so it obtains amount of money enough to invest it in mortgages, and after all sell these loans on mortgage market. These transactions are held over and over, which gives the possibility the lenders and borrowers get their additional money. This scheme worked great until we faced the mortgage crisis. After becoming the owner of Countrywide Financial the Bank of America received in its property around 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 input of money is highly profitable transaction for Countrywide Financial executives. The activity which BofA is planning to undertake now will let around 260 thousand borrowers with problem loans keep their real estate. it will happen after modifying more then 40 billion US dollars of mortgages. All this is planned to to be realized during the next two years. A big number of problem borrowers results into increase of Countrywide foreclosure properties 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.