I was skimming the "Yahoo Finance" headlines today and ran across this. It's not marked "opinion piece", so my morning coffee and I were unprepared for the closing sentence.
ALL BUSINESS: Ex-Countrywide execs to aid housing
"PennyMac's leadership could help fix the economy, or stuff they [sic] own pockets. Let's hope capitalism doesn't rule".
4 comments:
To say that the executives at Countrywide were unethical would be a gross understatement. They paid their salespeople higher commissions to put customers into the most riskiest of loans even if they qualified for a less risky mortgage product. And the former CFO had to be instrumental in this undertaking. The former CFO who is the CEO of the new Pennymac. Guarenteed he will screw as many people for as much money as he can.
Also, there is a big assumption in their business model. That is the assumption that banks, who have been completely unwilling to mark their asset to market values, will all of a sudden want to sell their loans to Pennymac for 20 cents on the dollar. They will be more than happy to do so for second mortgages that are worthless but that is about it.
I love the Princess Bride!!!!
I think the word they were looking for was "profiteering". Funny how in ever market crash "capitalism" gets equated with profiteering again, rather than being understood simply as an economic system. It will pass.
Tony,
I have been thinking about your 'unethical' comment regarding putting people in risky loans as it relates to the consumer.
There are plenty of products on the market -- perhaps millions -- that I wouldn't buy. For example, I don't spend a lot on supposedly good-for-me health supplements. I would buy a Toyota over a Chrysler. I think McDonald's food is probably bad for me. I wouldn't buy a time share or an annuity. I'm not sure that makes the sellers of these things unethical. Consumers should always be skeptical. I was offered several incredibly stupid loans and I certainly never called the lenders back.
If the author of the article is suggesting that there's an alternative to 'capitalism' in this situation that is better, I'm all ears. But now we're facing an $8,000 cash advance from taxpayers and FHA loans at 3.5% down. Our current legislators (not capitalists) are now the ones pushing risky loans!
Jim the Realtor had a post on this on Friday. The comments are unforgiving. His own reads:
"Isn’t this what go us in trouble, in the first place. Here we go again. Let’s buy some houses. We don’t need any money. We can get a FHA loan with 3.5% down. Now the government will give us $8,000 in cash, up front.
Do the math.
$200,000 home
$7,000 down
$8,000 from the government
$1000 for a week end in Vegas
Let’s buy a few"
And I think from our perspective here in Northern Virginia we see that it's working -- first timers are jumping over themselves to buy. But one wonders how many of them and us will regret it.
Harriet, it's so true and so sad. It angers me probably more than anything the govt has done in the last six years. It solves absolutely nothing in the long run. On top of that, it's a massive slap in the face to tax payers. "Here you are Mr. New Homeowner, take someone else's $8000 as a reward for buying a house." It makes people who were unqualified to buy (in this case because they didn't have any $ down) now qualified. Gee, kind of like what started this fiasco. I am so pissed I cannot find the words to describe it without being profane.
And of course, the unanswered question exists: what happens when these subsidies disappear? Are they ready for the market ramifications? If they are set to expire on a specific date and there isn't a replacement, do they think ANYBODY that plans to buy some time around that expiration date will be buying in the months past it? Seriously, by front-siding these "buyers", it all but assures a drastic stop in purchasing from first timers. That'll be a fun market to watch=)
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