Countrywide set to aid subprime borrowers

Source: Construction Digital

Date :2/11/2008 9:42:16 AM

Mortgage giant Countrywide is to announce a nationwide agreement with activist group ACORN to help sub-prime borrowers meet payments and keep their homes.

In a move to protect itself against the rising number of defaults on its books, Countrywide has said that it will launch an initiative, brokered with the Association of Community Organizations for Reform Now, or ACORN.

The programme calls for the company to try to manage payment plans for borrowers that are already behind in payments, regardless of which type of subprime loan they have.

Legal proceedings

“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, president of ACORN, the Association of Community Organizations for Reform Now.

Both sides say the deal aims to especially help people who bought homes during the housing boom using subprime adjustable-rate mortgages, or “ARMs.”

Subprime ARMs charge low “teaser” interest in their first few months or years, but rates later “reset” as high as twelve percent or more.

Some subprime borrowers claim they never realized their loan rates could change, and say they can’t afford the sharply higher interest charges.

Enthusiastic

"Countrywide is eager to work with borrowers, whether they are facing rate resets or some other type of financial difficulty," said Michael Gross, managing director of loan administration for Countrywide.

Despite the efforts to modify loans for some borrowers, some consumer groups argue the mortgage industry hasn't done enough, noting many borrowers continue to fall behind on payments.

February 11, 2008