Countrywide in $16bn mortgage lifeline

Source: Construction Digital

Date :24/10/2007 09:23:04

Countrywide Financial Corp., the largest U.S. mortgage lender, plans to offer $16-billion of adjustable-rate mortgages through the end of 2008 to help its troubled borrowers.

The lender will offer new mortgages to 52,000 subprime borrowers with $10-billion of home loans.

It also plans to modify $4-billion of loans for 20,000 prime and subprime borrowers who cannot refinance and $2.2-billion of mortgages for 10,000 subprime borrowers who are already delinquent.

Countrywide said its refinancing and restructuring program may help about 82,000 borrowers stay in their homes after pressure from politicians on the industry to clean up the excesses of this decade's housing bubble.

Housing crisis

The change in policy comes amid new concerns that the mortgage meltdown in not subsiding, and may actually get worse as more “teaser” rates expire and are adjusted sharply higher, sometimes raising mortgage payments several hundred dollars per month.

Rates on two million mortgages will rise by the end of 2008, and one-fourth of the affected homes may face foreclosure, the U.S. Department of Housing and Urban Development estimates.

Last week, U.S. Treasury Secretary Henry Paulson called the nation's housing crisis "the most significant current risk" to the economy.

October 24 2007

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