| Credit card debt demands our attention
For those who overextend their credit, bankruptcy is no longer a ready-made solution to their financial woes. Changes in federal bankruptcy law approved by Congress in 2005 make it harder for folks with above-average income to write off their debts. And lenders are less willing to approve home equity loans to consolidate debt in the aftermath of the subprime mortgage mess, especially for those with a poor credit history. The message is clear: U.S. consumers can't keep spending like there is no tomorrow. The use of credit cards has a role in a healthy economy, but they should not be abused. .
Home equity loan avoids fees of refinancing mortgage
Q. I would like to refinance my adjustable-rate mortgage to lock in one of today's low rates. But I don't want to pay a lot of fees for a new mortgage that would actually make my monthly payments bigger over the next year. Refinancing would cost thousands, which seems like an awful lot for a loan of only about $80,000. What should I do? A. You might consider a home equity loan instead of an ordinary mortgage. Many home equity loans are unusually attractive now. Yours is a dilemma that confronts many homeowners with adjustable mortgages, or ARMs: They may be happy with the low interest rates they're paying today - in many cases only 4 percent or so - but they worry their rates will rise in the future. It would be nice to lock into a low fixed rate, but refinancing fees can total thousands.
Countrywide Posts $421 Million Q4 Loss
Late payments also rose on traditional mortgages and home equity loans.
'While considerably improved from the previous quarter, (results) were adversely impacted by further credit deterioration across the industry and continued illiquidity in the secondary mortgage markets,' Chief Executive Angelo Mozilo said in a statement.
Countrywide wrote down $831 million largely related to prime home equity loans. It set aside $907 million for credit losses, up from $70.8 million a year earlier. Restructuring charges totaled $87 million.
For all of 2007, Countrywide lost $704 million, or $2.03 per share.
Bank of America, the second-largest U.S. bank, on Jan. 11 agreed to buy Countrywide in a transaction that on Monday valued the mortgage lender at about $4.3 billion.
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