Countrywide Sees Problems in Prime - Why Doesn’t Everyone Else?

Countrywide obviously sees problems in the prime lending world - especially when it comes to 2nd mortgage liens and equity lines of credit. They admitted as much in their last conference call. Considering that most 2nd mortgage products aren’t available to people with less than a 660 mid-FICO this is a surprisingly prime problem.

On Friday, Countrywide made further changes to its 2nd mortgage and HELOC business with this announcement to its broker and seller partners:

Home Equity Product Update

In a continuing effort to align with today’s market, Countrywide has determined that the following documentation types will no longer be offered in the second-lien position:

· No Ratio
· SISA
It is important to note that Home Equity business remains an important component of Countrywide’s mortgage-lending franchise.

The following timeline applies to these updates:

· Last day to lock/register under current guidelines: July 27, 2007
· Last day to deliver loans under current guidelines: August 17, 2007
· Last day to fund loans under current guidelines: August 27, 2007
Updates to the matrix and Seller’s Guide will be posted on Platinum on July 27, 2007.

Eliminating stated income/stated asset and no ratio loans blatantly says that regardless of credit score these loans are unacceptable risks. Containment be damned - prime borrowers who can’t document their income are ineligible for this product. A welcome sign of sanity returning to underwriting.

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