Pick-A-Refinance

Do you have one of those Option ARM products that goes from a great payment to a "how is anyone going to pay that?" Is it with Wachovia? If it is, then you might want to refinance now. It is possible that you have an Option ARM that you will be able to afford when it does adjust, but 99% of those loans are not in that category. That is why people got the Option ARM loans. They could not afford the fully amortized loan amount.

Good news. From Wachovia press release:

Effectively immediately, Wachovia is waiving all prepayment fees associated with its Pick-A-Pay mortgage to allow customers complete flexibility in their home financing decisions. This includes all Pick-A-Pay mortgages on 1-4 unit residences.

Additionally, for all new loan originations, Wachovia is discontinuing offering products that include payment options resulting in negative amortization.

These Negative Amortization loans are really hurting Wachovia and they clearly want to get them off of their books now before they become more of a problem. If you have been waiting for your pre-payment penalty to go away hoping the rates were not going to skyrocket past your ability to pay then you should act now.

Fed approves BofA Purchase of Countrywide

The Federal Reserve has officially approved the purchase of Countrywide by Bank of America. I am not surprised by this event. BofA and Countrywide have been working on this for months. I suspect that this purchase would have never been allowed if the fear of "Bank Failures" in the papers were not looming.

The purchase has been approved, but that does not mean by any means that it is complete. I suspect that some serious negotiations are occurring, but I would be surprised if the sale is not completed. The only question now is what is Countrywide really worth? Countrywide is the holder of thousands of foreclosures in California alone. One high profile foreclosure includes that of Ed McMahon.

From MarketWatch:

The Fed said Bank of America pledged to operate the combined mortgage operations under the bank's "polices, internal controls, and other risk-management systems."

House prices have fallen further since January, while mortgage markets and other credit markets have been severely jarred by the near collapse of Bear Stearns and downgrades of bond insurers.

That's increased concern about whether Bank of America will complete its purchase of Countrywide at the original terms. However, the bank has repeatedly stressed that it stands behind the deal.