Countrywide to aid more mortgage borrowers
Countrywide Financial Corp (CFC.N: Quote, Profile, Research), facing heavy pressure to help more borrowers avoid foreclosure, on Monday announced an expanded program to help people stay in their homes, even if they have fallen behind on subprime mortgage payments.
The program was created by the largest U.S. mortgage lender and an advocacy group, the Association of Community Organizations for Reform Now, or ACORN.
It comes as hundreds of thousands of borrowers nationwide face rising borrowing costs as interest rates on their adjustable-rate mortgages reset higher. Economists have said the nation’s housing crisis may have already helped push the overall economy into recession.
“From a borrower’s perspective, any program to help people stay in their homes is a good idea,” said Jaime Peters, an analyst at Morningstar Inc. “Borrowers who can demonstrate they can afford lower payments will be most helped.”
The announcement was delayed more than three weeks, after Calabasas, California-based Countrywide agreed on January 11 to be acquired by Bank of America Corp (BAC.N: Quote, Profile, Research), the second-largest U.S payday loan online. bank.
Under the program, Countrywide and ACORN will work to provide options for subprime borrowers who have fallen behind on payments, such as interest-rate freezes and reductions, and well as short-term repayment plans.
Countrywide will also offer relief for borrowers with subprime “hybrid” ARMs, which carry low “teaser” rates that often jump after two or three years. Borrowers with strong payment records, but who have or may face difficulty with higher payments as rates reset, may be able to refinance into prime loans, or get a five-year rate freeze, Countrywide said.
“Countrywide and ACORN share the belief that no subprime borrower who has demonstrated the ability and willingness to make payments should face foreclosure,” said Maude Hurd, ACORN’s president, in a statement.