Do as I say…not as I do? Countrywide’s VIP Program and other Subjectivity Issues
Filed under: Lending Ethics, Mortgage Industry Trends — admin @ 11:45 am
A big gripe with consumer groups and regulators of our industry are the subjectivity and arbitrary nature of fee structures, which leaves the system open to discrimination and abuse. On June 12th, Portfolio.com outed Senators Dodd and Conrad for receiving “FOA” loans from Countrywide Financial. Following a vehement denial from Conrad in the Washington Post, one can’t help but feel like you just towel dried with a side of bacon.You may ask… FOA? Fallacious Option Arm? Oh no… nothing so pedestrian… FOA is the internal CWF designation for “Friends of Angelo.” According to Portfolio.com :
“the V.I.P.’s received better deals than those available to ordinary borrowers. Home-loan customers can reduce their interest rates by paying “points”—one point equals 1 percent of the loan’s value. For V.I.P.’s, Countrywide often waived at least half a point and eliminated fees amounting to hundreds of dollars for underwriting, processing and document preparation. If interest rates fell while a V.I.P. loan was pending, Countrywide provided a free “float-down” to the lower rate, eschewing its usual charge of half a point. Some V.I.P.’s who bought or refinanced investment properties were often given the lower interest rate associated with primary residences.”