Countrywide Financial Corp., the troubled lender that helped fuel the housing boom and subsequent credit crisis with high-risk mortgages, is expanding help for subprime borrowers threatened with losing their home.
The nation's largest mortgage lender, working in conjunction with community organization ACORN, said yesterday that it intends to become an industry leader in foreclosure prevention and "home retention." The lender said it will offer "workout programs" to any of its struggling subprime borrowers with a capacity to make monthly payments -- not just those with hybrid adjustable-rate mortgages about to reset.
"Countrywide is eager to work with all borrowers who need help," including those with fixed or adjustable-rate subprime mortgages, said Michael Gross, national loan administrator for Countrywide, during a national media conference call that was followed by news conferences at 45 ACORN offices across the nation, including in Baltimore.
The program will broaden mortgage relief previously offered through an industry-backed HOPE NOW alliance program as well as through a previously announced $16 billion home retention initiative from Countrywide, ACORN and Countrywide officials said. The initiative took effect Jan. 31 and is offering help to borrowers in various stages of mortgage delinquency as well as borrowers who are current in their payments.
"Countrywide has stepped up to the plate to partner with us," said the Rev. Gloria Swieringa, chairman of the Maryland chapter of ACORN, the Association of Community Organizations for Reform Now, during the Baltimore news conference.
ACORN estimates that if the soaring pace of foreclosures continues, the Baltimore area could face $300 million in property value depreciation and lost tax revenue.
The program likely will help at least 81,000 borrowers, which is the number of loans that Countrywide modified in 2007, by offering an interest-rate freeze or reduction, said Pete Mills, an executive vice president for public affairs during the Baltimore news conference.
He said the lender has stepped up its loan restructuring efforts, which helps not only borrowers but investors in the loans.
"In a down market, these modifications provide better returns for investors," Mills said.
Mills said he could not disclose the number of loans Countrywide services or owns in Maryland. He said about 30 percent of the lender's subprime loans nationally are delinquent. Countrywide's loan servicing portfolio was $1.48 trillion at the end of 2007.
ACORN officials said the group has sent letters about the program to about 15,000 at-risk Maryland borrowers. The group also plans to go door to door in selected areas.
Countrywide has come under wide criticism for its subprime lending practices. The company reported nearly $2 billion in losses for the last two quarters of 2007, and rumors swirled of possible bankruptcy. Last month, Bank of America announced it would acquire Countrywide for $4.1 billion in stock.
Yesterday's agreement will offer options to Countrywide borrowers with subprime adjustable loans and strong payment records facing difficulty because of interest rate resets. Those borrowers may be able to refinance into a lower-rate loan or get a five-year extension of the original rate.
For delinquent borrowers who want to stay in their homes, options include short-term repayment plans or loan modifications, which might mean an interest-rate freeze or rollback or, in some cases, a rate reduction.
The lender said it will work with borrowers to establish an affordable repayment plan. If no repayment plan is affordable, the lender will consider cutting the interest rate or waiving late fees. For borrowers with a short-term illness or unemployment, the lender said it might offer a two-year rate reduction.
Countrywide customers experiencing financial hardships can call Countrywide's Home Retention Division at 800-669-6650 or the ACORN Housing call center at 866-67-ACORN.