Posted at 12:58 PM on February 24, 2009
by Jeff Horwich
Naturally, there had to be a conclusion to my earlier post about the craziness of getting a mortgage for our new house.
After a respite, things turned even crazier at the last minute. I was hesitant to name our lending bank before but now I can: Countrywide, which became synonymous with the subprime crisis that fueled the economic downturn. We'd been getting signals that they never wanted our loan. And in the end, with literally zero business days before our scheduled closing and despite having given their "final" approal, they bailed on it.
Well, technically, they bailed on doing business with a whole category of lenders in Minnesota -- so-called "correspondent lenders" (basically a higher level of mortgage broker who uses their own money to do the deals, before passing the mortage on to a bigger entity). Whatever is going on at Countrywide, it's not good. This was a symptom of how much they're ailing. And we were very nearly victims of it.
With a week or two, it's fairly straightforward to find another bank and re-approve, perhaps with some modifications, a loan package. To do so over the weekend and holiday (Presidents Day) when the closing is 9 a.m. Tuesday, takes a truly heroic effort. Which is what we got. In the end, Countrywide was out of the picture and we got our loan through another much more obscure lender.
As I mentioned in the earlier post, our mortgage guy was very concerned that this episode might cast a bad light on the industry, so I'm somewhat reluctant about this post. Let me say, then: People should be getting out there in the real estate market. They shouldn't be afraid to go up for a loan if they've got decent credit, don't overreach on the house, and plan to make their payments. There are great real estate agents and mortgage brokers who are working hard for your interest.
But what became very clear through all this is just what a major realignment is happening right now. For Countrywide, my sense is that our mortgage loan was written to some extent around the ways they used to do business. For example, we scheduled our closing on our new home before closing on our current home. We had the cash needed for closing, and a non-contingent offer on our house. This kind of thing was routine as could be in the old world.
But today, it's a red flag -- along with all kinds of other terms that wouldn't have phased anyone six months ago. I get the sense a lot of this stuff is still on the books -- and Countrywide and other banks are in the process (partly, perhaps, under orders from Uncle Sam) to wipe it off. It feels like no one quite knows at the moment what the balance is between wooing the customer -- and spurring the market -- and being conservative enough to stave off disaster.
All's well that ends well, I guess. But I think we might have lost our loan package if not for one thing: An independent mortgage agent who was an expert on the mortgage market, watching it like a hawk, and willing to really fight to get us the best deal possible. I shudder to think what an actual Countrywide agent might have tried (or not tried) to do for us. With the industry in retreat, it's smart to get yourself a good advocate.
Now...time to grab my hammer and get my new home ready for the big move-in...
Posted at 5:09 PM on February 24, 2009
by Jeff Horwich
As someone who works for a competing news organization, it's hard not to raise an eyebrow at what appears to be a state grant for two struggling newspapers.
The Minnesota Job Skills Program and the University of Minnesota (through it's journalism school) are ponying up money to help the Pioneer Press and Duluth News Tribune "help newspapers revolutionize their business model and to thrive in an increasingly Internet-based industry," according to a U of M news release I got this afternoon.
The project will offer a series of training programs for staff in the advertising and editorial operations of the newspapers, both of which have undergone considerable downsizing in the past year. It is believed to be the first job training grant to help the news industry with the assistance of a journalism school. The goal of the partnership is not only to train employees with new technical, computer-based skills, but also to reassess the way in which news and advertising is delivered.
The Job Skills grant totals $238,000; the U of M and the papers themselves are chipping in an additional $470,000 (it's not clear how much of this is the U and how much is the papers).
If I'm skeptical, you can imagine what they think of it at the Star Tribune (where, in a similarly unprecedented move, they are considering going to foundations for donations to fund their investigative work).
The incentives here all make sense: I suppose you get help wherever you can if you're a newspaper these days. From the state perspective, they're interested in preserving jobs. And it sounds like the U will have new opportunities to get their students involved with the process of (trying to) save the newspaper newsrooms in a digital world.
But something about it ain't quite right. Even though they're not turning profits right now, newspapers are for-profit entities. Owners and investors are big beneficiaries of a potential recovery. In that event, is there any profit-sharing planned for the state and the U?