William Eichler

BofA Left to Clean Up Countrywide's Mess

For those worrying about the BAC or Countrywide mortgages you should check out the FHA Housing Stabilization and Homeownership Retention Act of 2008 (still to be voted on). Especially Sec.257 (c) (6)(A)(i) which provides for the refinancing of such existing mortgages in an amount not greater than 90% of the current appraised value of the property involved.

A mortgage was obtained at $200,000 to cover the original appraisal.
Time passes and it drops 25% to $150,000. Take 90% of 150K and
the FHA will buy it for $135,000; for a 32.5% loss for the bank.

The bank was stuck with a non-performing loan or, a very hard to resell house. Now it has capital. Sound good to me.