Countrywide REO - Countrywide Foreclosure homes - Countrywide REO properties

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If we compare the assets of banks, then we can say, that the greatest bank is Bank of America. Almost everybody have heard about Countrywide Financial - the organization that got a loan of around four billions dollars, and finally caused for a mortgage crisis.

Exactly the Bank of America invested the money in stock capital of Countrywide Financial. Finally in summer 2008 BofA became an official owner of this huge bank and turned into the most powerful mortgage lender in the USA. This transaction was very successful - on one hand Countrywide Financial avoided the bankruptcy, on the other hand Bank of America got more influence on foreclosure market.

It is important to mention, that this transaction let the BofA have its own part in 25% of home loans in the United States. The situation described is simply one example out of thousands of cases, when financial institution gets substantial advantages after creating trouble loans. Such kind of loans are also called subprime loans, of course this situation attracted a lot of attention, all problem lenders were experiencing a number of investigations. The main source of financial resources for loans is the money saved on deposit accounts by clients. But Countrywide Financial works according the different scheme, it takes loans on the Wall Street, so it receives amount of money enough to invest it in mortgages, and finally sell these loans on mortgage market. These transactions are repeated over and over, which enables the lenders and borrowers get their profit. This cycle worked great until we faced the mortgage crisis. After the Countrywide Financial became the part of the Bank Of America, the latter became the owner of over 5800 branches situated in 31 different states in US.

More over Bank of America owns 700 loan offices and 200 banking centers situated all over the United States of America. Taking into account that a lot of borrowers loose their homes at the end, this input of money is highly profitable operation for Countrywide Financial executives. In the nearest plans of BofA is to take a decision which will give a possibility around 260 thousand borrowers with bed debts save their houses. it will happen due to modifying more then 40 billion US dollars of mortgages. All this is supposed to to be held during the upcoming two years. A big number of clients with problem loans results into 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 of preventing foreclosure, the home 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.