The biggest American bank - the Bank of America is found in Charlotte, N.C.. Almost everybody have heard about Countrywide Financial - the trouble lender that got a loan of around 4 billions US dollars, and finally created a basics for a mortgage crisis.

We have to underline, that this acquisition let the BofA have its own part in 25% of home loans in the United States. This case is simply one example out of a number of cases, when organization gets substantial advantages after financing problem loans. These loans are also called subprime loans, of course this situation attracted a lot of attention, all problem lenders were investigated. Normally as a source of money for mortgages banks use the money saved on deposit accounts by clients. But Countrywide Financial works according the different scheme, it takes loans on the Wall Street, so it gets amount of money enough to invest it in mortgages, and after all sell these loans on foreclosure market. These transactions are repeated over and over, which gives the possibility the lenders and borrowers get their additional money. This scenario worked great until we faced the mortgage crisis. Countrywide Financial got under the control of Bank of America, more over the BofA became the owner of around 5800 branches situated in 31 different states in US.

Also Bank of America possesses 700 loan offices and 200 banking centers situated all over the United States of America. Taking into account that a lot of borrowers loose their houses at the end, this input of money is very successful transaction for Countrywide Financial executives. In the nearest plans of BofA is to take a decision which will allow around 260 thousand borrowers with problem loans keep their houses. it will happen as a result of modifying more then 40 billion US dollars of mortgages. All this is planned to to be held during the upcoming two years. A rising amount of problem borrowers leads to increase of Countrywide REO amount.

Post foreclosures (REO)

REO property or real estate owned property belongs to banks. How does it happen that banks own a real estate? Well, it is easy to understand: bank gives a loan, so mortgage appears, if client cant pay his dept and if there are no ways to avoid foreclosure, the home becomes the property of financial organization. It may seem that foreclosures can’t bring high profits as bank want to sell it offering the price which will at least cover the amount of the first loan. On the other hand, if you will be more attentive, you will see some ways to benefit greatly from buying a foreclosure house.

It may be the situation, when more then one loan is secured to the real estate; actually it happens quite often nowadays. In case second lender doesn’t make payments to the first lender and starts own foreclosure procedure, in this case the second lender is not part of foreclosure process any more. That is the main reason why plenty of second mortgages are valued around 20% less then the normal market price.

• Largest foreclosure lenders:
• FannieMae REO homes
• Freddie Mac foreclosed homes
• Countrywide foreclosure properties
• BofA Foreclosure homes
• Fifth Third Bank REO homes

Bank doesn’t benefit from being an owner of a house; it needs money to flow constantly to get higher net profit. More over keeping a foreclosure as an asset may cause additional expenses. That is why bank wants to sell this burden as soon as possible, and it is likely to accept even not high price, just to cover the dept.