'Nightly News' Attacks Home Lenders for Not Caving in to Troubled Borrowers
The June 9 NBC “Nightly News” broadcast continued an all-out media assault on home lenders, which are suffering in an industry ailing from subprime mortgages gone bad. Correspondent Lisa Myers criticized one lender, Countrywide (NYSE:CFC), for being slow to help homeowners in trouble and vilified the company for not being quicker to accept concessions.
“[Alan] White (professor at the Valparaiso University School of Law) estimates that two-thirds of those who need help are not getting it,” Myers said. “It took months for Melissa and Travis Simon of Waterloo, Iowa, to get the help they needed from their loan company.”
“I called them every day, all day,” Melissa Simon said to “Nightly News.” “Because, you would be on hold and I would have to hang up again. They were not willing to help.”
Myers praised the Iowa state government for knowing how to “persuade” a loan servicer to give in.
“On the verge of giving up, the Simons went to a counseling service, then to Iowa State Mediation Service, which persuaded their loan servicer, Countrywide, to modify their loans – reducing interest rates by almost half,” Myers said. “Because of its experience two decades ago with farm foreclosures, Iowa is ahead of most states in bringing pressure to bear on reluctant lenders and embarrassed borrowers to find common ground.”
Myers featured Iowa Attorney General Tom Miller, a Democrat – although his political affiliation wasn’t included in the report – who told Myers “lenders need to be more willing to make concessions and modify loans.” He made the situation seem like a win-win, although the home lender was forced to take a hit – whether it is a cut in a previously agreed-to interest rates or a smaller payment.
“Everybody wins,” Miller said. “The homeowner stays in the home and has an affordable loan. The lender or the investor gets more money in these kinds of situations than they would on foreclosure.”
Countrywide is not the best of shape. The mortgage lender recently reported a first-quarter net loss of $893 million. The company had shown a profit of $434 million during the same period a year ago. The Federal Reserve granted permission to Bank of America Corp. (NYSE:BAC) on June 5 to buy Countrywide for $4 billion.