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.
