This unfortunate lede mars an otherwise solid story in the NYT today on how former Countrywide executives are now snatching up defaulted mortgages on the cheap:
Fairly or not, Countrywide Financial and its top executives would be on most lists of those who share blame for the nation’s economic crisis.
Say what? “Fairly or not”? If the Times can’t state that by now, who can it say it about?
Has the Times read any of its own Gretchen Morgenson’s work? It doesn’t fit with the impression left by the rest of the article, either, leaving the impression it was slapped on there by a rear-covering editor.
This source nails it:
“It is sort of like the arsonist who sets fire to the house and then buys up the charred remains and resells it,” said Margot Saunders, a lawyer with the National Consumer Law Center, which for years has sought to place limits on what it calls abusive lending practices by Countrywide and other companies.
Still, the Times is good to point out that it’s a good thing that the vultures are picking over these mortgages.
The Laverdes, of Porter Ranch, Calif., had fallen three months behind on their mortgage after sales at a furniture store owned by the family dipped in the economic crisis. Margarita Laverde and her husband were fearful that they might need to move their four children, three dogs and giant saltwater aquarium into a cramped apartment, leaving behind their dream home — a five-bedroom ranch on a suburban street overlooking the San Fernando Valley.
But a PennyMac representative instead offered to cut the interest rate on their $590,000 loan to 3 percent, from 7.25 percent, cutting their monthly payments nearly in half, Ms. Laverde said.
“I kept on asking, ‘Are you sure this is correct? Are you sure?’ ” Ms. Laverde said. Even with this reduction, PennyMac stands to make a profit of at least 50 percent, a company official said.
Ms. Laverde could not care less that executives at PennyMac used to work at Countrywide.
Would that more of them were going that route. Many are bound up in a web of owners via securitization that’s difficult to untangle, something I would have liked to have seen the Times explore or at least mention.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.