Wednesday, April 30, 2008

Fast and Easy

Countrywide had a pretty wide stance.

Countrywide Financial Corp. reported an $893 million loss for the
first quarter, amid mounting evidence of serious problems with its
underwriting of many home loans.

A federal probe of Countrywide, the nation's largest mortgage lender,
is turning up evidence that sales executives at the company
deliberately overlooked inflated income figures for many borrowers,
people with knowledge of the investigation say.

Some of the problems are surfacing in a mortgage program called "Fast
and Easy," in which borrowers were asked to provide little or no
documentation of their finances, according to these people and to
former Countrywide employees. Both Countrywide and Fannie Mae, the
government-sponsored company that bought many of the loans, classify
the loans as "prime," meaning low-risk.

Fast and Easy borrowers aren't required to produce pay stubs or tax
forms to substantiate their claimed earnings. In many cases,
Countrywide didn't even require loan officers to verify employment,
according to an October 2006 presentation by Countrywide's consumer-
lending division. That left the program vulnerable to abuse by
Countrywide loan officers and outside mortgage brokers seeking loans
for customers who might have been turned away if their finances had
been more closely scrutinized, according to three current and former
Countrywide senior executives and to several mortgage brokers who
arranged loans through the program.