The biggest american bank - the Bank of America is found in Charlotte, N.C.. Everyone knows about Countrywide Financial - the institution that took a loan of more then four billions dollars, and finally caused for a mortgage crisis.

It is important to mention, that this deal let the BofA have its own part in 25% of home loans in the United States. The situation described is just one example out of millions of cases, when financial institution gets huge advantages after dealing with trouble lenders. These loans are also known as subprime loans, of course this situation attracted a lot of attention, all problem lenders were investigated. The main source of financial resources for loans is the money saved on deposit accounts by clients. But Countrywide Financial works according the different scheme, it borrows money on the Wall Street, so it gets amount of money enough to invest it in mortgages, and after all sell these loans on secondary market. These transactions are repeated over and over, which gives the possibility the parts get their profit. This scenario worked great until we faced the mortgage crisis. After the Countrywide Financial became the part of the Bank Of America, the latter obtained over 5800 branches situated in 31 different states in US.

More over Bank of America controls 700 loan offices and 200 banking centres situated all over the United States of America. Taking into account that almost all borrowers loose their real estate at the end, this investment is highly profitable deal for Countrywide Financial executives. The next step of BofA will give a chance more then 260 thousand borrowers with bed debts keep their houses. it will happen due to modifying more then 40 billion US dollars of mortgages. All this is planned to happen during the next two years. A big number of problem borrowers results into increase of Countrywide REO number.

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 prevent foreclosure, the house 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 foreclosure listings
• Freddie Mac foreclosures
• Contrywide REO
• BofA Foreclosures

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.