Wednesday, October 15, 2008

Countrywide, Loan Mofification and California home owners

Countrywide mortgage pact may be worth $3.5 billion to California loan holders - Los Angeles Times
Countrywide mortgage pact may be worth $3.5 billion to California loan holders
Bank of America Corp. agrees to nation's largest mortgage-workout program to settle charges of lending abuse.
By E. Scott Reckard, Los Angeles Times Staff Writer
October 6, 2008
An estimated 125,000 Californians who are struggling with risky mortgages from Countrywide Financial Corp. may get their loans modified and payments reduced under a program to be announced today.

In a pact that could save mortgage holders billions of dollars, Countrywide owner Bank of America Corp. has agreed to the nation's largest loan-modification program to settle charges of lending abuse brought by California and other states.

California foreclosure - the bailout may cause prices to fall further

California Officials Try to Avoid Second Housing Hit - WSJ.com
Parts of Southern California hit hard by the housing crisis are maneuvering to shape the Treasury Department's plan to buy up troubled assets so that it doesn't wind up causing a second wave of pain in their communities.
[A development property is for sale in Colton, in California's San Bernardino county.] AFP/Getty Images

A development property is for sale in Colton, in California's San Bernardino county. Officials in areas of the state hit hard by the housing crisis, such as San Bernardino county, are pushing for a federal bill that would let local businesses and governments buy up some of the distressed real estate to ensure that it doesn't fall into the hands of speculators who have no interest in the local community.

Officials in San Bernardino and Riverside counties are determined to avoid a repeat of what happened 20 years ago, when the savings-and-loan crisis led to a massive selloff of distressed real estate in the area by the federal government's Resolution Trust Corp. Many of those properties, including foreclosed homes, were sold at fire-sale prices to investors who unloaded them quickly. In some cases, entire neighborhoods of what had once been homeowners turned into largely rental communities, further depressing property values and delaying an economic rebound.

"We don't want the cure to be worse than the disease," said Steve PonTell, a business owner in the vast area east of Los Angeles known as the Inland Empire. He said he is worried that neighborhoods could be seriously damaged if the Treasury "dumps" real-estate assets in such a way that leads to absentee ownership.