Big check for Countrywide exec

so let me get this straight. David Sambol, amongst others, led Countrywide Financial down the path of disaster yet BofA can’t wait to get their hands on him? There may be much investigating to do regarding Countrywide’s fall from grace and the fact that the upper echelon made out like bandits yet the rank and file saw their retirement, stock options and future employment vanish. However, why BofA thinks Sambol will not repeat his Countrywide mistakes is a mystery to me

Well, thankfully there’s a middle ground of blame for the corpbank vs irresponsible lendees mentality.

It’s the flipper’s who blew so much hot air into this bubble, overfeeding the values of these securitized loans while driving the low end and first time buyers into VAR’s, hedging thier bets that appreciation would keep them in the subprime seats on the bandwagon.

I was just looking at my note from Angelo when Sambol was handed the gavel…and it was more of a hatchet.

I’m certainly not privy to what extent he or his predecessor was involved with the valuations of securities and what not, but he was bumped up to deal with the organizational realities which were beginning to manifest beyond diminishing load origination.

All I know that in our building, we figure our retention packages will be more along the lines of a B of A sticker for our swipe card…if it still works to access the building after Transaction Day.

here are many variations of the ARM that can get very complicated to understand. We only recommend and sell these basic arms. They are easy to understand and easy to explain. No surprises.

It is my personal belief that the “Pay Option ARM” is what is taking the sub-prime market down and creating so much havoc in many of the major banks and lenders portfolio’s. So many people were enticed into these loan programs with very low teaser rates and the ability to have monthly payment options. With this product you have 4 payment options to choose from - a 30 year fixed payment, 15 year fixed payment, interest only payment and then a MINIMUM payment. Even though there is a 1 to 6 month teaser rate, the rate adjusts after that to a higher premium rate for the payment options than a regular ARM. People were choosing this product when real estate values were appreciating and even though they were deferring their interest they were making up for it in appreciation. This was a huge product for many Californians who wouldn’t have otherwise been able to afford a home. The minimum payment allowed for them to get into the home they wanted for a fraction of the mortgage payment. With declining home values across the nation many people are finding themselves upside down on their mortgages. They owe more money than the what they can sell it for.
It has been our experience that many consumers were not educated correctly on this program by their mortgage broker and to their dismay didn’t find out the consequences of paying only the minimum payment until it was to late. All to often we find that in general most people get fixated on that minimum payment, which is a fraction of the fully amortized payment, and pay that only. You are not even making a full interest only payment so all of the money that you are not paying (the difference between the interest only payment and the minimum payment) is getting added back onto your principal. So each statement instead of your principal staying the same (interest only program) or going down (30 year fixed program) your principal is going up. Most people don’t realize this until it is to late and they owe more on their home than what it is worth or they have eaten all the equity up in their home and the loan recast to a much higher rate and payment. Many people can’t refinance the home because their is not a net tangible benefit and they can’t afford a fully amortized loan at today’s historically low rates. It is a very dangerous product that only the savvy borrower should use. Really, all of our savvy borrowers choose the interest only hybrid arm. There are other ways to pay your home down faster than a 30 year fixed.

A problem for YOU- As a Adult, take responsibilities for your actions, make your payments, and be an upstanding member of society. When you fail to make your payments due to job loss, or some other factor, simply get a 2nd job. I did and I’ve never been late. If you signed up for a hybrid ARM program, then stop the whining. Learn to read and comprehend as they taught in 1st grade and become an adult. I am sick and tired of seeing the absurd comments about those whining because they thought they could get rich quick. There is no such thing as a get rich scheme. You signed the documents, you agreed to the terms as evidenced by signed docs. Grow the hell up!

Prove it!

“That is a completely bogus comment. Sambol and Countrywide did not invent these loans.”
I beg to differ - they did invent these loans and that’s a problem.

This is definitely an issue that has polarized the people in the U.S. On one side we have those, who see the working and middle class (according to HUD 71% of homeownership that have gone on foreclosure) as sole responsible party of this mess. On the other we have those who believe that the financial institutions and the government are responsible. The fact of the matter is that we have a huge problem on our hands. And who is going to bail them out of this. It is a shame that we have such a short memory and have forgotten about the Savings & Loan mess of the 80’s. Like then the tax payers will again pay for the mistakes of both lenders and barrowers. I do know about you, but this is disgusting. I am more in favor of those who believe that the financial institutions and the government are to blame. Up until now, people would buy a home well within their budget without fancy financings tricks, why?

Let’s look at some facts well phrased in Eric Englund’s essay “From Prime to Subprime, America’s Home-Mortgage Meltdown Has Just Begun”

“America’s unfolding mortgage-debt crisis did not emerge in a vacuum. When Alan Greenspan’s Federal Reserve pounded the federal funds rate down to 1%, in June of 2003, it is crucial to understand that such a low rate materialized due to the Fed’s aggressive creation of money and credit. In other words, America’s monetary central planner “knew” that massive inflation was needed to “rescue” the economy from the above-mentioned dot.com and telecom implosions. Housing was specifically targeted by the Federal Reserve to serve as “…a key channel of monetary policy transmission.” With this colossal inflation of the money supply, I would argue that a hyper-reality surfaced in the housing market – with corresponding bubbles emerging in consumer electronics and automobiles. During such episodes of heavy inflation, people tend to lose their sense of value including suspending any fear of debt.”

“Regrettably, when the Federal Reserve targeted housing to reflate the U.S. economy with enormous doses of money and credit, America’s creeping credit socialism was given fertile ground to grow into a monstrous housing bubble. Mortgage lenders irresponsibly said “yes” to just about any borrower while Alan Greenspan cheered them on. It is no wonder why I have seen the most debt-laden, maladjusted personal financial statements in my entire career. In fact, the Federal Reserve’s data support my observations as domestic household debt has increased from approximately $2.5 trillion in 1986, to $7.7 trillion in 2001, to $12.9 trillion in 2006 (with 76% of the 2006 figure being mortgage debt). The toxic combination of mind-numbing inflation and credit socialism has crippled household finances from coast to coast. Therefore, do not believe the talking heads who claim that the mortgage mess is limited to the subprime stratum. As the housing bubble continues to implode, the financial fallout will result in nothing short of an international economic disaster. The Federal Reserve’s September 18, 2007 one-half percent cut in the fed funds rate will not do anything to head off America’s looming household-insolvency crisis.”

ROCK ON Pete Eden

The best thing I see here is how many comments are posted with the theme of:

America, take responsibility for your own actions !! Stop looking for hand-outs and bail-outs the minute things get a little tough. Our sense of entitlement has gotten out of hand.

Sambol is a part of the hierarchy that rode this company down the drain.
BOA is making a foolsh investment to begin with - and this is one of the more nutty parts of it. The guy should
be lucky just to have a job - instead he’s grossly rewarded for … what?

I believe the people are responsible for the loans they took out. Also the banks are responsible for the loans they offered. If houses go into forclosure that is the homeowners fault. If numerous forclosures cause banks and mortgage companies to go bankrupt and fail, that is their fault.
I think the government needs to keep out, we can’t be condoning or rewarding bad consumer choices.

I wonder how many computer aided scanners and tubes of white out you have in your office. Mortgage BROKERS are really into that stuff for generating crap loans and selling them to larger lenders. At Chase, we see this all to often.

I am sure that Bank of America will sorely miss your account that you closed- All $2500 of it at most. Perhaps they can call up Bear Stearns for a loan to cover their loss. The joint venture between Countrywide and Bank of America will create an empire that is best for the consumer.

As an HONEST MORTGAGE BROKER, who started her career at Countrywide over 5 years ago, I believe our market will turn around. Bank of America has been lending money to CW for several years. It only makes sense for B of A to do what they’re doing, and if they go down, they have a “CW exec” to point the finger at. Executives, for the most part, deserve getting large salaries. No one is making a stink about how much athletes get paid, who aren’t performing, etc.

The reason the market is what it is:
1. Lenders allowing 100% financing. If you take the time to save up a down payment, you have the discipline to make your monthly mortgage payment. The number of homeowners that went into foreclosure that didn’t make their first mortgage payment in frightening!
2. Adjustable Rate Mortgages & Credit. ARM’s are for the savvy borrower who can maintain their credit, so when they do refinance, they still qualify. If you open up a ton of accounts, are late on your payments, then wonder why you don’t qualify - look in the mirror!! ARM’s are traditionally a lower rate which is what is so appealing. I am on a 7 year ARM, so I know to make sure I’m aware of my credit and liabilities.
3. Education. It is as much of a responsibility to yourself to be educated on your business transactions, as it is to have a Broker who explains what you’re signing.
4. Declining Markets. Foreclosure sales back to the bank are considered comparable sales in an appraisal report. If your neighbors default and loose their house it might affect what your house is worth. Going to refinance and your home value not covering your principal balance will put you in a terrible position - especially if you have an ARM that’s going up!!

The good news for us, is that we will always need mortgage financing!! This industry is not going anywhere, anytime soon..

Hold your head high, and know it will get batter!

Let’s not forget the builders and realtors for the current mortgage mess. Most large builders and real estate companies have their own mortgage companies or preferred lenders.
I have been in the mortgage business for over twenty years and cannot count the number of times I have been asked from these sales people “What is in it for me if I give you my business”.

That is a completely bogus comment. Sambol and Countrywide did not invent these loans. They simply sold them just like every other lenderin the USA. CONSUMERS NEED TO TAKE RESPONSIBILITY FOR THEIR ADULT DECISIONS. The only ones that put themselves into this situation are the ones not smart enough to listen to their attorney at closing and actually read something before they sign it. It’s no different than going out and buying a hooker, and then blaming the hooker for the STD that YOU contracted. Take ownership of the problem that you created. For crying out loud you are an ADULT!

Mortgages aren’t supposed to be handed out on “the honor system”. It is the responsibility of the lenders to see that there is a reasonable expectation for the loans to be repaid. Instead lenders pocketed the fees and sold the bad loans off in bundles that defied easy analysis and now we all get to pay for it (via the Fed).
It’s sad to see some of you allowing schadenfreude to override your good sense.

I have been a long time customer of BofA. I did not think it was wise for them to support Countrywide and am seriously considering changing banks if they pay this amount to keep an executive who contributed to the current mortage problems.

Its sick how nobody takes responsibility in this country anymore. The borrowers should 1st look to themselves before pointing the finger.

When I am CEO on my own company, I do hope to make $5-$10 million per year. BofA is asking Sambol to take on average $9 mil per year for 3 years. Not a bad sum. They need to retain him to understand their business model during the transition. If you have the business experience and education, you too could have the chance to earn that kind of money. It’s all about the choices you make in life that help you get to the top. Most of the wealthiest people in the world started with nothing or worse lived in poverty before they busted their butts and made something of themselves. Why should they be punished for becoming a role model for the millions of people that feel sorry for themselves?
Second - my wife and I refinanced with New Century Mortgage - and we knew the risks associated with our 2-year ARM. We’re not looking for anyone to bail us out. Instead, we’re solving our own issues by ouselves and not blaming it on Bush, Countrywide, or anybody else. Our signatures are on the note.
I also stand by McCain noting that he chooses to do nothing about the mortgage issue because it is not the government’s responsibility to hold your hand. Bear Stearns and their investors employ hundreds-of-thousands of people worldwide - and the bail out has a larger impact of stabilizing employed people than issuing $600 rebate checks, which won’t pay your mortgage payment anyway. I disagree about helping companies in this situation but can also understand the impact this could have on the market, economy, much more than losing your home. Time to go live with your parents or rent an apartment and start over. You’ll be better and stronger for it.

It still amazes me that people consider the people that took loans they can’t afford are blameless and the innocent victim of ‘evil banks’. The banks are guilty for making bad loans and the borrowers are guilty for taking them. Both parties are guilty and ALL of us are suffering because of it. Can’t tell you how many people I’ve seen that bought houses way over their means and then feel the victim when their ‘house of cards’ fall over.

I don’t think it is possible for this guy to be worth $28M but BOA must think he is. Highly likely he works his tail off and is not ‘lazy’. Do you really think ‘lazy’ people get to be #1 or #2 guys in major companies? More like workaholic overachievers.

Hey Sean, get a job!

why would you give a failure that much money. I could make a company go bankrupt on half that salary.

Sambol should get 28 years not 28 million. Maybe the reporter got it wrong.

While these executives should take on a large portion of the blame, lets not forget all those people who signed up for mortgages they could not afford, in hopes their houses would gain value. Our country is full of lazy people who don’t hold steady jobs, not because they can’t, but because they don’t want to. They continue to use up lines of credit and never pay them back, take out loans on cars they can’t afford, and go on vacations they don’t have money to pay for. Then we bail them out with our taxes. Out of our 5% unemployment rate, I think its safe to say 2% of them are not even trying to find work, but enjoying the benefits of welfare and unemployment.

The CEO didn’t put families in those situations. Granted, many, many people took out loans they couldn’t afford. But the vast, overwhelming majority grossly mismanaged their personal finances to begin with, living beyond their means. When desperate, people hear what they want to hear. And they will borrower more than they can afford, thinking short term. They are responsible for the documents they signed. Were the loans a unafforadable? You bet they were. But, where is the personal responsibility?

Don’t worry Dave. Enjoy your silk sheets and the golden jets with congac. When the US economy implodes, and the rest of the world along with it, you’ll have the luxurious experience of joining the ranks in scouring for food as we de-evolve back into a less than admirable pre-civilized world with littlelaw and order. Tune in 20 years from now. Afterall, we’ve only been a strong industrialized nation for 100 years. That’s a long time considering the planet’s been here for 5 billion. And you thought it would last.

@Sean
Given the anecdotal evidence posted throughout Money and CNN, many of these people’s greed or vanity pushed them to buy these extravagant houses. 28 million would fix maybe 50-100 mortgages. Given he’s #2 at Countrywide, his performance can probably mean the difference between hundreds to thousands of mortgage related jobs. 28 million would help salvage maybe 50-100 mortgages depending on the market. Also if he gets that money in cash, he gets taxed ~50% meaning he’s helping fund any future bailouts. I’m not saying his company didn’t screw over some people…just that until criminal charges are filed, he’s worth more trying to fix the mess than joining it.

Ex: The 70k to Food bank story…in what universe is it a good idea to spend nearly half of your gross income on an interest only mortgage as a sole breadwinner? She lives in Cali…she should be renting for 1k/mon and saving for those kids’ college funds. Instead she’s trying to hold onto a home she likely has no equity in and will only dig herself a hole too deep to escape from. 70k in Cali is the equivalent of making 30k elsewhere in the country and she should have lived accordingly.

Totally agreed.

In response to the ealier comment from Sean in MA why is it always the companies fault and not the consumer? The media is making it seem like the consumer had no choice but to take a loan that they cannot afford? The bottom line is that there is fault on both ends. Not every company misled the public. When is the consumer going to take some responsibility for their own actions? Sean is correct about 1 thing for sure in our country the rich get richer, the poor get a free ride and the middle class pays for everything.

How about holding people individually responsible for their own actions! Until a gun is held to their head it’s their fault for “not understanding”. No one wants to say it but they new what they were doing!

It is uncalled for that these executives make as much as they do for basically doing nothing more than being yes men. What about all the average joe’s that can’t make ends meet? They have to choose between buying groceries or paying the oil bill to keep the house warm. Good that we live in a country where we reward people for doing the wrong thing.

That’s intelligent. Blame one person and one company for every foreclosure out there. The house next door to me is being foreclosed on by Aurora Home Loans, I suppose that is Mr. Sambol’s and Countrywide’s fault also….

He is the brightest Country Exec around. Its because of him that mortgage is not as bad as it can be. They are retaining him to save this company and improve the crisis. He is the key for BofA. 28 million worth? Probably not. But who cares when top 5 execs of 5 investment banks in the world made over half a billion in the past 5 yrs in salary and compensations. 28 is peanuts

Angelo Mozilo earned every dime and more - Where were the critics when he was returning the best stock performance for any bank / financial institution for over a 25 year period. This includes millions of Americans that held (maybe unknowingly) Countrywide stock in their 401K plans, pensions, etc. They sure did not complain then about Angelo’s compensation. This country is very short-sighted and tends to kick people when they’re down. I myself was laid off by Countrywide last year after 9 years with the company. That’s life. You move on and you don’t depend upon the govt, Harry Reid, George Bush, etc to care or your every need.

The dumb homeowners put themselves in this situation anyone with half a brain knows that.

That is a completely bogus comment. Sambol and Countrywide did not invent these loans. They simply sold them just like every other lenderin the USA. CONSUMERS NEED TO TAKE RESPONSIBILITY FOR THEIR ADULT DECISIONS. The only ones that put themselves into this situation are the ones not smart enough to listen to their attorney at closing and actually read something before they sign it. It’s no different than going out and buying a hooker, and then blaming the hooker for the STD that YOU contracted. Take ownership of the problem that you created. For crying out loud you are an ADULT!

“families without food, heat, a place to live, etc”

Wow, I didn’t realize that when you foreclosed you were unable to go back to renting. Is that really the case?

No, it isn’t.

This executive may or may not be a scumbag, but let’s not go overboard with this “starving people, homeless familes, think of the children!” nonsense.

Countrywide didn’t lie on their financial statements. Countrywide didn’t buy more house than they could afford. Countrywide didn’t ask for some foolish mortgage. Most people have nobody to blame but themselves. When are people in the US going to quit blaming others and take responsibility for their own actions?

Nice, 28 million in cash and stock for someone who helped put these families in possibly their worst situation ever; families without food, heat, a place to live, etc. Maybe try to redeem yourself by giving some of that money back to the people who were misled, rework their loans for them, give them some sort of hope in a country that continues to punish the hard working while enabling the lazy.