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49-616: In 2004, authorization was given for the fund to grant $ 20 million to Countrywide Financial in return for a promise "to create 7,500 new jobs in the state by 2010." The grant (all of which are approved by the Governor, the Lieutenant Governor and Speaker of the House) is one of the largest made from the fund in terms of the size and the number of jobs promised. In the fall of 2007, while slashing jobs and with its stock price plummeting, Countrywide

98-509: A civil lawsuit in Cook County Circuit Court against Countrywide Financial Corporation on June 25, 2008. The lawsuit cites information gathered from documents obtained via a subpoena in the fall of 2007. Madigan's office claims the "mortgage lender engaged in "unfair and deceptive" practices to get homeowners to apply for risky mortgages far beyond their means." California Attorney General, Jerry Brown , followed suit by filing

147-455: A business, industry, or trade-related organization is a stub . You can help Misplaced Pages by expanding it . Countrywide Financial Bank of America Home Loans is the mortgage unit of Bank of America . It previously existed as an independent company called Countrywide Financial from 1969 to 2008. In 2008, Bank of America purchased the failing Countrywide Financial for $ 4.1 billion. In 2006, Countrywide financed 20% of all mortgages in

196-447: A company to view the applicant's credit, and public record documents such as lawsuits and divorce records. Although it must be authorized by the applicant, Countrywide explicitly does not consider applicants who deny authorization for a search. This policy has led to otherwise qualified applicant complaints and dispute filings which claim this policy is discriminatory, invasive, and compromises the applicant's privacy. Countrywide maintains

245-621: A majority-owned joint venture. This was sold to First American in 2007. Offshore Services commenced operations in India in 2004. Set up to exploit the strategic advantage of employing systems specialists based in the sub-continent, it provides business process and technology services to the Parent Company and its subsidiaries in both the United States and the United Kingdom. In 2003, Countrywide

294-471: A mezzanine layer of reinsurance coverage for losses between minimum and maximum specified amounts to the insurance companies that provide private mortgage insurance (PMI) on loans in its servicing portfolio. It provides this coverage concerning substantially all of the loans in the Company's portfolio that are covered by PMI, which generally includes all conventional loans with an original loan amount over 80% of

343-487: A policy of not filing the legally required Internal Revenue Service Form 1099 to independent brokers. The validity of this is questionable however. Countrywide agreed to a settlement with New York state attorney general Eliot Spitzer to compensate black and Hispanic borrowers improperly steered by Countrywide salespeople to higher-cost loans. The company also agreed to improve training and oversight of its loan officers and to pay New York state $ 200,000 to cover costs of

392-431: A similar lawsuit on June 25, 2008, accusing the lender of breaking the state's laws against false advertising and unfair business practices. The lawsuit also claims the defendant mislead many consumers by misinforming them about the workings of certain mortgages such adjustable-rate mortgages, interest-only loans , low-documentation loans and home-equity loans while telling borrowers they would be able to refinance before

441-535: A specific industry, such as community development financial institution (CDFIs), commercial loans , residential loans , and multi-family loans. To provide these solutions vendors work with companies and design the systems around their complexities. Some of these systems can be thousands of programs and can be considered some of the most complex software systems ever built. Wells Fargo , PNC Financial Services , Bank of America , JPMorgan Chase , Ocwen Financial Corporation are examples of large companies involved in

490-411: A statement that its mortgage business has access to a nearly $ 50 billion funding cushion. After the collapse of American Home Mortgage on August 6, 2007, attention returned to Countrywide Financial which at the time had issued about 17% of all mortgages in the United States. Only days later, Countrywide Financial disclosed to the U.S. Securities and Exchange Commission (SEC) that these disruptions in

539-465: A week-long bank run . Bank of America Home Loans is composed of: The Mortgage Banking segment produces mortgage loans through various channels on a national scale. Nearly all the mortgage loans the company produces in this segment are sold into the secondary market , mainly in mortgage-backed securities. In 2006, 45% of those mortgages were conventional non-conforming loans , loans too large to sell to Fannie Mae . The company generally performs

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588-515: Is because when a loan is refinanced the servicing fees and other benefits of servicing cease, making the value of these assets extremely volatile. For this reason, companies that hold large amounts of servicing rights tend to hedge the value of those servicing rights using interest rate sensitive derivative instruments such as interest rate swaps and swaptions . In order for these companies to exist, they need to utilize software. There are many loan servicing software companies and they tend to focus on

637-431: Is said to have bragged that in order to approve minority applications, "lenders have had to stretch the rules a bit." Countrywide's commitment to low-income loans had grown to $ 600 billion by early 2003. Some customers have complained that after the devastating hurricanes Katrina , Gustav and Rita , Countrywide told loan customers in the affected areas that they could take a break on payments without any late fees, and

686-924: The Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA)). Because GSEs and private loan investors typically do not service the mortgage loans that they purchase, the bank who sells the mortgage will generally retain the right to service the mortgage pursuant to a master servicing agreement. The payments collected by the mortgage servicer are remitted to various parties; distributions typically include paying taxes and insurance from escrowed funds, remitting principal and interest payments to investors holding mortgage-backed securities (or other types of instruments backed by pools of mortgage loans), and remitting fees to mortgage guarantors, trustees, and other third parties providing services. The level of service varies depending on

735-505: The Office of Thrift Supervision . Countrywide Bank is the 3rd largest Savings and Loan institution and is the fastest-growing bank in United States history. Assets from deposits are currently approaching $ 125 billion. Countrywide Bank primarily originates and purchases mortgage loans and home equity lines of credit for investment purposes. Most of these loans are sourced through its mortgage banking subsidiary, Countrywide Home Loans. In addition,

784-640: The Bank obtains retail deposits, primarily certificates of deposit , through the Internet, call centers, and more than 200 financial centers, many of which were located in Countrywide Home Loans' retail branch offices as of April 1, 2007. Countrywide Warehouse Lending provides warehouse lines of credit to mortgage bankers, who use these funds to originate loans. These mortgage bankers are primarily customers of Countrywide Home Loans' Correspondent Lending division and

833-643: The Board of Governors of the Federal Reserve System to purchase Countrywide Financial Corporation. Then, on June 25, 2008, Countrywide announced it had received the approval of 69% of its shareholders to the planned merger with Bank of America. Finally, on July 1, 2008, Bank of America Corporation completed its purchase of Countrywide Financial Corporation. In 1997, Countrywide spun off Countrywide Mortgage Investment as an independent company called IndyMac Bank . Federal regulators seized IndyMac on July 11, 2008, after

882-553: The Capital Markets divisions; the mortgage bankers use warehouse lines of credit from Countrywide Warehouse Lending to help originate loans, then sell those loans to Countrywide through Correspondent Lending or Capital Markets. The Capital Markets segment primarily operates as a registered securities broker-dealer, a residential mortgage loan manager, and a commercial mortgage loan originator. CFC also operates broker-dealers in Japan and

931-467: The UK has been confined to providing support to Barclays and Prudential Assurance, who continue to use the proprietary originations, servicing and arrears processing systems developed for GHL and Countrywide by Countrywide Technology Group (CWTG). A second venture in the UK, Valuation Services, provided one of the first electronic residential property valuation services to third parties in the United Kingdom through

980-454: The United Kingdom, an introducing broker-dealer of futures contracts, an asset manager, and a broker of mortgage servicing rights. Except its commercial mortgage activities, the company transacts only with institutional customers , such as banks, other depository institutions, insurance companies, asset managers, mutual funds, pension plans, other broker-dealers and governmental agencies. Customers of its commercial real estate finance business are

1029-576: The United Kingdom. Following the acquisition of Woolwich by Barclays plc, this relationship developed further, with GHL acquiring the Barclays mortgage portfolio through a transfer of ownership of the Barclays mortgage operation in Leeds to GHL in 2003. By 2005, GHL operation processed more than £11.3 billion ($ 20.3 billion) in loans, all of which are subserviced for Barclays , PLC , the joint venture partner. As of December 31, 2005, Global's subservicing portfolio

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1078-557: The United States, at a value of about 3.5% of the United States GDP, a proportion greater than any other single mortgage lender. Countrywide was founded in 1969 by David S. Loeb and Angelo Mozilo . Loeb died in 2003. The initial public offering was less than successful, with company stock trading over the counter at less than $ 1 per share. In 1985 Countrywide stock was re-listed on the New York Stock Exchange under

1127-585: The corporation considered the officeholders "FOA's" — "Friends of Angelo" (Countrywide Chief Executive Angelo Mozilo ). The politicians extended such favorable financing included the chairman of the Senate Banking Committee , Christopher Dodd , and the chairman of the Senate Budget Committee , Kent Conrad . The article also noted Countrywide's political action committee had made large donations to Dodd's campaign. Senator Dodd proposed that

1176-402: The cost and reduce the availability of debt, may continue or worsen in the future…. There can be no assurance, however, that the Company will be successful in these efforts, that such facilities will be adequate or that the cost of debt will allow us to operate at profitable levels. This raised speculation that Countrywide was a potential bankruptcy risk. On August 10, a run on the bank began as

1225-410: The expected cash flows received from servicing less the amount that would be required to adequately compensate a servicer (this incorporates an expected cost of servicing plus a profit margin required by market participants). The value of servicing assets or liabilities is highly interest-rate sensitive due to the relationship between interest rates and expected prepayments (i.e., loan refinancing). This

1274-474: The federal government buy up to $ 400 Billion in defaulted mortgages. Citizens for Responsibility and Ethics in Washington ( CREW ) has called for House and Senate to investigate Senators Conrad and Dodd. It was reported that James Johnson , former CEO of Fannie Mae and an adviser to presidential candidate Barack Obama , had received loans under the "Friends of Angelo". Johnson announced he would step down from

1323-436: The housing boom", and some servicers targeted borrowers "less likely to make timely payments" in order to collect more late fees. Servicers (servicing companies) are normally compensated by receiving a percentage of the unpaid balance on the loans they service. The fee rate can be anywhere from one to forty-four basis points depending on the size of the loan, whether it is secured by commercial or residential real estate, and

1372-496: The interest rate on their loans adjusted. In August 2008, Connecticut Attorney General Richard Blumenthal also brought suit against Countrywide, alleging that deceptive lending practices had ripped off Connecticut homeowners. [1] The suit was settled in October 2008 after Bank of America acquired Countrywide. The settlement involves the modifying of troubled 'predatory loans' up to $ 8.4 billion. The states currently involved in

1421-536: The investigation. Countrywide subprime documents show a policy of lending to families with as little as $ 1000 of disposable income, often compromising their ability to pay living expenses. Economist Stan Liebowitz writes that the Fannie Mae Foundation singled out Countrywide Financial as a "paragon" of a nondiscriminatory lender who works with community activists, following "the most flexible underwriting criteria permitted." The chief executive of Countrywide

1470-404: The level of service required. Those services can include (but aren't limited to) statements, impounds, collections, tax reporting, and other requirements. Companies recognize servicing rights as distinct assets or liabilities when ownership of those rights is contractually separated from ownership of the underlying loan. The value recognized for servicing rights is based on the net present value of

1519-414: The loans, using the servicing operations of Countrywide Home Loans, to securitize those loans that become eligible for securitization. The remaining loans are serviced through foreclosure and liquidation, including collecting government insurance and guarantee proceeds relating to defaulted FHA and VA program loans. Securities trading activities include trading debt securities in the secondary market after

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1568-1382: The ongoing servicing functions related to the mortgage loans that it produces. It also provides various loan closing services, such as title , escrow , and appraisal . The Mortgage Banking segment comprises three distinct sectors: Loan Production, Loan servicing , and Loan Closing Services. The role of Loan Production is to originate and fund new loans and to acquire already-funded loans through purchases from other lenders. Loan Production produces mortgage loans through four divisions of Countrywide Home Loans: Consumer Markets, Full Spectrum Lending, Wholesale Lending, and Correspondent Lending. Consumer Markets and Full Spectrum Lending offer loans directly to consumers. Loans produced by these two retail divisions are originated, funded, and sold by Countrywide. Consumer Markets offers various products, whereas Full Spectrum Lending focuses primarily on products appropriate for customers with less than prime-quality credit. Wholesale Lending offers loans to consumers whose loans are originated by another mortgage broker. These loans are funded and sold by Countrywide but originated by other lenders. Correspondent Lending purchases mortgage loans from other lenders, which include mortgage bankers, commercial banks, savings and loan associations, home builders, and credit unions. These loans may be sold by Countrywide to end-investors on

1617-1138: The original issuance of the security. Underwriting activities encompass the assumption of the risk of buying a new issue of securities from the issuer and reselling the securities to investors, either directly or through dealers. Capital Markets primarily underwrites mortgage-related debt securities. The Insurance segment activities include offering property, casualty, life, and credit insurance as an underwriter and as an insurance agency and providing reinsurance coverage to primary mortgage insurers through two business units: Balboa Life and Casualty Operations, and Balboa Reinsurance Company. Balboa Life and Casualty Group underwrite property, casualty, life, and credit insurance in all 50 states. Its products include Lender-Placed Property and Auto, which includes lender-placed auto insurance and lender-placed, real-property hazard insurance ; Voluntary Homeowners and Auto, which underwrites retail homeowners insurance and home warranty plans for consumers; and Life and Credit, which underwrites term life, credit life, and credit disability insurance products. Balboa Reinsurance Company provides

1666-523: The owners or sponsors of commercial properties, who can be individuals or institutions. Countrywide Asset Management Corporation manages the acquisition and disposition of loans from third parties and loans originated by Countrywide Home Loans on behalf of Countrywide Home Loans. These are typically delinquent or otherwise illiquid residential mortgage loans, which have primarily originated under Federal Housing Administration (FHA) and Veterans Administration (VA) programs. The Company attempts to rehabilitate

1715-428: The payments would be added back to the end of the loan. They now contend that Countrywide forced the loan customers to pay the missed payments in a lump sum, along with late fees they were told they did not have to pay, within 30 days or face foreclosure. In June 2008 Conde Nast Portfolio reported that numerous Washington D.C. politicians over recent years had received mortgage financing at noncompetitive rates because

1764-551: The property's appraised value. It earns a portion of the PMI premiums in return for providing this coverage. The primary activities of the Global Operations segment was Global Home Loans (GHL): a UK third-party administrator (TPA) formed out of a joint venture between Countrywide and Woolwich plc in 1998. Activities included Loan Processing and subservicing, providing mortgage loan application processing, and mortgage loan subservicing in

1813-471: The secondary market but are originated and funded by other lenders. Loan servicing services loans, i.e., collect payments from the borrower, handles escrow accounts, tax and insurance payments (if applicable), then remit "advances" to the investor's trustee as specified in the Pooling and Servicing Agreement (PSA). Loan servicing typically retains a fraction of the payment made (normally 25 – 75 basis points of

1862-535: The secondary mortgage market shut down, curtailing new mortgage funding. Loan servicing Loan servicing is the process by which a company (mortgage bank, servicing firm, etc.) collects interest, principal, and escrow payments from a borrower. In the United States , the vast majority of mortgages are backed by the government or government-sponsored entities (GSEs) through purchase by Fannie Mae , Freddie Mac , or Ginnie Mae (which purchases loans insured by

1911-492: The secondary mortgage markets could hurt it financially: Since the company is highly dependent on the availability of credit to finance its operations, disruptions in the debt markets or a reduction in our credit ratings could have an adverse impact on our earnings and financial condition, particularly in the short term… Current conditions in the debt markets include reduced liquidity and increased credit risk premiums for certain market participants. These conditions, which increase

1960-476: The settlement are Arizona, California, Connecticut, Florida, Iowa, Michigan, North Carolina, Ohio, Texas, and Washington. Other states may also join the settlement. There is also a shareholder class action lawsuit for investors in asset-backed securities from Countrywide. When Countrywide finances mortgage loans, they usually packaged them for sale to large investors as mortgage-backed securities . Fannie Mae or Freddie Mac can only buy loans which conform to

2009-576: The six major counties of Southern California. The Banking segment consisted of Countrywide Bank, FSB , and Countrywide Warehouse Lending. Formerly, the bank was known as Countrywide Bank, N.A.. This nationally chartered bank was regulated jointly by the Office of the Comptroller of the Currency and the Federal Reserve . Still, it converted its charter to a federally chartered thrift that is regulated by

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2058-726: The standards of government-sponsored enterprises . Non-conforming mortgages securities must be sold in the private, secondary market to alternative investors. On August 3, 2007, this secondary market essentially stopped trading most of the non-conforming securities. Secondary mortgage market disruptions had happened previously, but, the new disruption appeared more serious, both larger in range and likely duration. Alt-A mortgages (loans given to apparently creditworthy borrowers without much or any documentation) completely stopped at ratings lower than AAA. Difficulties extended to much of AAA-rated mortgage-backed securities. Only securities with conforming mortgages were trading. Countrywide Financial issued

2107-498: The ticker symbol CFC. Countrywide's stock has been described as the "23,000% stock" by Fortune magazine. Between 1982 and 2003, Countrywide delivered investors a 23,000.0% return, exceeding the returns of Washington Mutual , Walmart , and Warren Buffett 's Berkshire Hathaway . On January 11, 2008, Bank of America announced that it planned to purchase Countrywide Financial for $ 4.1 billion in stock. On June 5, 2008, Bank of America Corporation announced it had received approval from

2156-464: The type of loan and the terms negotiated between the servicer and the investor seeking their services, and may also include activities such as monitoring delinquencies, workouts/ restructurings and executing foreclosures. In exchange for performing these activities, the servicer generally receives contractually specified servicing fees and other ancillary sources of income such as float and late charges. Mortgage servicing became "far more profitable during

2205-511: The unpaid principal balance) as a "servicing fee". Loan servicing also generates income in the form of interest on monies received and held before paying scheduled advances to the trustee, fees charged for late payments, force-placed insurance, document requests, legal fees, payoff statements, etc. LandSafe and its subsidiaries offer loan closing services, including real estate appraisal services, automated credit reporting products, flood determination services, and residential title services for

2254-836: The vice-presidential vetting position on June 11, 2008, in order to avoid being a distraction to Obama's campaign. In June 2008 The Wall Street Journal reported that Franklin Raines , a former CEO of Fannie Mae, received below market rates loans at Countrywide Financial because the corporation also considered him an "FOA". He received loans for over $ 3 million while CEO of Fannie Mae. On July 16, 2008, The Washington Post reported that Franklin Raines had "taken calls from Barack Obama's presidential campaign seeking his advice on mortgage and housing policy matters." Subsequent attempts to connect Obama's campaign with Franklin Raines were characterized by The Washington Post as "a stretch". The office of Attorney General of Illinois , Lisa Madigan , filed

2303-515: Was eventually acquired in a fire sale by Bank of America . But thanks to the " claw-back " provisions in the program, grantees return all funds to the state for jobs not created. In 2012, it was announced that Apple would be adding a new campus in Austin, creating 3,600 new jobs. The Fund would be investing $ 21 million over ten years. [3] This Texas -related article is a stub . You can help Misplaced Pages by expanding it . This article about

2352-596: Was the subject of a class-action lawsuit alleging overtime violations. Countrywide was charged with working employees 10–15 hours per day, 6 to 7 days per week without compensating them for overtime wages. The lawsuit was settled in May 2005, with the payment of $ 30 million in compensation to 400 account executives. Additionally, Countrywide is one of many companies that conducts in-depth background searches of new employee applicants. The background search goes beyond typical employment, education, and criminal history searches, and enables

2401-554: Was £59 billion ($ 102 billion). In November 2005, Barclays announced that it intended to terminate the third party administration arrangement with GHL and bring the mortgage originations and servicing operations back in-house. This resulted in Countrywide buying out Barclays' remaining 30% stake in GHL. Barclays brought the operation back in-house in February 2006. Since then Global's presence in

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