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...
"time to grab my hammer and get my new home ready for the big move-in"
good on ya. In 'The Walls Around Us' the author makes the point that a house is not really 'ours' until we've modified it and left our mark.