Countrywide under investigation by the FBI for securities fraud

Countrywide under investigation by the FBI for securities fraud.

In a report on CNNmoney.com this morning, a government official confirms that Countrywide Financial Corporation, acquired by Bank of America in January, is under investigation for fraud.

According to CNN,

“The probe will examine underwriting and mortgage origination practices, and whether the company misrepresented losses related to subprime loans, the paper said.

Subprime mortgages, or home loans given to borrowers with weak credit, have been at the root of a crisis that has rocked the U.S. economy.

Though the Federal Bureau of Investigation has acknowledged ongoing investigations related to the subprime debacle, neither the FBI nor the Justice Department would comment on the specific targets.

“The FBI has been investigating potential fraud in the mortgage/sub-prime lending industry, however, we can not confirm or deny which companies are under investigation,” said FBI spokesman Richard Kolko.

A law enforcement official told CNN that there are currently 16 companies being investigated.”

The New York Times reports that unnamed government officials with knowledge of the case, say that Countrywide is being investigated to determine whether or not the company misrepresented it’s financial position and the soundness of it’s loans in securities filings. The investigation is still in the early stages and it’s not clear yet if any charges will be filed.

The investigation of Countrywide comes after probes into the subprime mortgage fallout crisis. 14 other companies are a part of the broader investigation by the FBI.

“Countrywide already faces federal and state investigations of it’s lending practices, as well as several lawsuits by investors and mortgage holders.” - Reuters

CNN reported in February that Countrywide has broadened it’s mortgage workout scope where borrowers with fixed rate loans will be eligible for restructured loans. You can find more on that story at this link on CNN Money.

Will the changing face of suburban living cause slums?

Will the changing face of suburban living cause slums?

Many people are moving closer to the city as gas prices and and costs for other necessities rise. Homes that typically have been a bargain may not be such a good deal in the future. The upside of suburban living - better schools and safer neighborhoods - has begun to erode.

Now, I don’t think we’ll see a mass exodus in people leaving the suburbs, rather a slower progression much like when people began moving IN to the suburbs. Already, we have seen more gang activity in suburbs than most inner cities.

According to an article by Christopher Leinberger in The Atlantic, much of these problems are attributed to the mortgage crisis but what’s really happening is that the social problems are being intensified by the waves of foreclosures.

Leinberger says

“For 60 years, Americans have pushed steadily into the suburbs, transforming the landscape and (until recently) leaving cities behind. But today the pendulum is swinging back toward urban living, and there are many reasons to believe this swing will continue. As it does, many low-density suburbs and McMansion subdivisions, including some that are lovely and affluent today, may become what inner cities became in the 1960s and ’70s—slums characterized by poverty, crime, and decay.”

It’s certainly an interesting phenomenon that will continue to change over the next two decades or so. You can read more about it The Atlantic: The Next Slum?

~ Annie

Thoughts: Sub-Prime Meltdown

Is the sub-prime meltdown the kiss of death in the REI world?

I don’t think so. In fact, in some ways I really think it’s going to be a bigger boost than a boon.

Why do I think so?

Because the fact remains that people still have to live somewhere. And real estate, over the long haul, still is a sound investment. Even with the sluggish economy, there are still folks out there with money. And historically, when people don’t know where else to stash their money, they head for real estate. One way or another, that infuses the market with the necessary cash and gives everyone good returns on their money.

Real estate is still a proven money-maker. And this market doesn’t change that.

Stay tuned for more thoughts.

~ Annie

PS - Check out my new weight loss site - The Weight Loss Papers at http://theweightlosspapers.com 

Seattle Experiences 16-year High for Unsold Homes

According to a recent article in The Seattle Times, 2007 marks a 16-year high for unsold homes. The article states that inventories of unsold homes across the U.S. has increased 2.2% during the month of July to 3.85 MILLION. This according to the National Association of Realtors.

Sales are down 9% from earlier this year and the median home price has dipped to $228,900, a difference of 0.6 since last July. Overall home sales are 5.7% below 2006 numbers for closed home sales.

What does this mean for the Seattle Real Estate market? And for investors? We’ll explore this in detail in the coming week.

Real Esate Research Basics Now on Amazon.com

A little while ago I went to Amazon.com and my book, Real Estate Research Basics is listed as available. It ships within 2-3 weeks, which I’m not too happy about - thought it was supposed to be 24 hours, but at least it’s there and available.

Please feel free to check it out - Real Estate Research Basics: A Primer for New & Experienced Investors

And if you send me your receipt, I’ll throw in a copy of the eBook and a few other goodies free.

~ Annie