From 2004 to 2007, Countrywide approved millions of mortgages to homebuyers, on its way to becoming a recognized brands in the mortgage lending industry. Unfortunately, Countrywide originated a large percentage of its residential mortgages in the sub-prime market. In addition, the lenders’ representatives put many borrowers in adjustable rate mortgages and other risky loan products.
The housing market started on a downward trajectory in late 2006. Issues with the general economy led to massive job layoffs. By 2008, the rate of foreclosures increased 81 percent over 2007 figures. Many Countrywide borrowers who lost their jobs, or experienced other difficulties, were among the first significant wave of individuals who lost their homes to foreclosure.
In 2008, Bank of America (BAC) purchased the nearly bankrupt Countrywide Financial for $4.1 billion. The acquisition made Bank of America the largest mortgage lender in the country. Overnight, BAC grew to 5,800 branches, in over 31 states. It had 700 loan offices and 200 banking centers stretched across the country.
More importantly, the purchase of Countrywide by Bank of America added over 9 million residential mortgages to BAC’s residential real estate portfolio, including Countrywide REO, and badly delinquent loans, which were close to entering the foreclosure pipeline.
In late 2011, Bank of America Foreclosures totaled $3.9 billion, with 4 to 5 times that amount in the foreclosure process. As America’s largest mortgage lender, $400 billion of BAC’s $450 billion real estate portfolio consists of residential mortgages.
Inventory to Grow
Countrywide REO, Bank of America Foreclosures, HUD properties, Fannie Mae foreclosures and other government foreclosures contribute to the massive oversupply of homes. This inventory of foreclosed homes will continue to grow, including a significant number of BAC and Countrywide REO properties.
Bank of America and four other mortgage servicers have finally settled the mortgage foreclosure issues with the government. The settlement includes new procedures for future foreclosures. Many housing analysts expect the foreclosure rate to increase over the coming months and finally “clear” out the shadow inventory of foreclosure properties. They believe dissolving the foreclosure inventory is necessary before a sustainable recovery can take place in the housing market.
Bank of America REO and Countrywide REO foreclosure listings have thousands of condominiums, single-family houses and townhouses for sale to individual homebuyers and real estate investors. The foreclosed homes listing include short sales candidates and other cheap houses for sale. BAC sells its Countrywide foreclosed properties and other bank owned properties in “as is” condition.
Buyers of Countrywide REO or Bank of America foreclosures receive “free and clear” title to the foreclosed homes. However, buyers should always have a real estate lawyer or title company perform a search of the records to ensure a clear title for Countrywide or Bank of America foreclosure purchases.