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User Info	What am I missing about ABX ?; entered at 2007-12-02 03:55:44
Analyzer Posts: 3971 Registered: 2007-08-22 Paradise	There are many things you are missing! You are assuming that freezing rates applies involves some kind of formal regulation and that it will save home all home owners having ARMs. Neither of these are true. You are witnessing politics at its best in the past couple of days. The rhetoric does claim they will save thousands from foreclosure, but the formal facts would likely not even result in double digits! I am serious….. it save a lot less than a hundred from foreclosure in the manner described. If you read the rhetoric you will see that it is indicating a VOLUNTARY program from lenders. In reality this likely means the rhetoric is announcing what lenders (meaning COUNTRYWIDE and ONLY COUNTRYWIDE) are already doing to try and save people from going into foreclosure. Afer all it is a VOLUNTARY program. Countrywide’s answer would be exactly the program spelled out by Arnold, and now Paulson. The truth is they are already attempting to prevent foreclosures by offering fixed rate programs BUT ONLY for people who ARE NOT behind in their mortgage payments and who meet FHA guidelines. That in itself denies almost every homeowner facing foreclosure from being able to apply for the fixed rate terms. AND… it is not clear that it will be fixed to the TEASER rate as many have implied! In fact they are likely offering these fixed rates ONLY when it can be paid by a higher spread, NOT a teaser rate. Furthermore applicants must PROVE they cannot afford to continue to pay their mortgage at current rates! So…. Only those current in their mortgages can apply BUT they must show they cannot afford to pay their mortgage under current rates! A CATCH-22 wouldn’t you say! How many people can meet those terms? FHA has indicated they are tightening monitoring of applications to their guidelines to make sure applications they previously allowed will be denied, so in fact fewer applicants will qualify for Freddie or Fannie underwriting. It’s difficult to understand why the feds would even contemplate a program that relies heavily on CFC as a servicer when CFC itself doesn’t appear to have plans to be an ongoing concern in 2008. The ExCWInsider, which needs to be taken with a grain of salt, indicates their servicers have a 10:4:1 ratio. They call 10 leads of which 4 apply for their fixed rate terms but only 1 qualifies. In the near future perhaps it should be called a 10:4:1:0 ratio to indicate the number that actually get sold to Freddie or Fannie! I hear others on this board stating that SERVICING is where the profits are. I don’t see that in ANY of the balance sheets. HELLO!!! As long as people are not in default the Servicing may have BEEN where the profits WERE. Well…. Times have changed. People are defaulting. Now SERVICING means constantly calling exasperated homeowners at the end of their means trying to get them to bring their accounts up to date. Where’s the profit in that?? And the servicers themselves are feeling exasperated by conversing with these poor home owners. If that wasn’t bad enough they are also paid based on the number of loans they close, so you can understand why they are exasperated. The ExCWInsider board also has a few ex employees indicating they were being required to work in excess of 8 hour days but only being allowed to claim 8 hour days because CFC doesn’t pay overtime. In their SEC filings FANNIE has indicated COUNTRYWIDE is their largest servicer. They best have plans now to replace them if they aren’t going to be around in 2008! Regarding the ABX… a VOLUNTARY program to freeze rates in a manner that does not IN FACT freeze rates for MOST ARM holders will NOT save the ABX from imploding. (Maybe ZEROING at this time would be a better description). 2007-12-02 03:55:44