Essay on Countrywide Financial Home Loans Failure

1300 Words 6 Pages
Countrywide Financial was cofounded by Angelo Mazilo and by the early 2000s it became the largest provider of home loans in U.S. It was also considered the main provider of home loans to minorities in U.S. because of its lower barriers regarding homeownership for low-income individuals. The company was well known for their services offered to their clients such as: loan closing, capital market, insurance and banking services.

In 2000s the main factor that contributed to the company’s reputation and growth were the higher margin for home equity and subprime loans. Countrywide Financial was one of the top providers of liar loans because of its riskier clients who had to pay higher fees and interest rates.
Subprime lending means lending to
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Countrywide Financial was cofounded by Angelo Mazilo and by the early 2000s it became the largest provider of home loans in U.S. It was also considered the main provider of home loans to minorities in U.S. because of its lower barriers regarding homeownership for low-income individuals. The company was well known for their services offered to their clients such as: loan closing, capital market, insurance and banking services.

In 2000s the main factor that contributed to the company’s reputation and growth were the higher margin for home equity and subprime loans. Countrywide Financial was one of the top providers of liar loans because of its riskier clients who had to pay higher fees and interest rates.
Subprime lending means lending to borrowers, people who would not qualify for traditional loan, at a rate higher than the prime rate. In other words the subprime loans are offered to high risk clients who do not qualify for conventional loans. For example, if a borrower has a credit score under 620 it is classified as low-income bracket. Many critics considered the subprime loans the main key to the 2008-2009 financial crisis.
Countrywide was criticized for negligence of giving out highly risky loans to people who could not afford them in order to receive quick profits and right now some homeowners are struggling under liar loans.

According to Datamonitor (2008, p. 5) s one of the company’s strengths was the “Diversified offerings” and “Strong financial performance”.
The
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