Countrywide to modify loans worth up to $16 billion
October 23rd, 2007
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Countrywide has announced a $16 billion “Home Preservation Program” that it says will “benefit more than 80,000 borrowers.”
Under intense pressure, in part because it’s the largest mortgage lender in the country, Countrywide says it will modify “up to” $16 billion in loans from buyers facing default.
No doubt, $16 billion and 80,000 are big numbers. However, this is a huge company, one that services nearly nine million loans.
Meanwhile, over at Moe Bedard’s very smart site, LoanWorkOut.org, a number of questions regarding the Countrywide announcement have been raised. See:
My question is this: Why $16 billion? Is that the extent of the problem?
The Countrywide release is below:
CALABASAS, Calif., Oct. 23 /PRNewswire/ — Countrywide Financial Corporation (NYSE: CFC) today announced a comprehensive home preservation program to reach out to borrowers at-risk of default. Countrywide will launch an outbound calling initiative to refinance or modify up to $16 billion of Countrywide loans for borrowers who are facing an adjustable-rate mortgage reset through the end of 2008.
“Countrywide is committed to helping its customers sustain homeownership,” said David Sambol, President and Chief Operating Officer of Countrywide. “Unprecedented times call for unprecedented remedies. We are determined to assist borrowers who have the willingness and wherewithal to remain in their homes, but need a little help to do it.”
“Countrywide believes that none of our subprime borrowers that have demonstrated the ability to make payments should lose their home to foreclosure solely as a result of a rate reset,” said Sambol. “This is yet another step in our continuing effort to identify and improve existing programs that assist our customers.”
Countrywide will offer tailored solutions to its borrowers to proactively address the rising foreclosure rate. Dedicated teams of Countrywide specialists will contact customers who are current in their payments and approaching a rate reset to ascertain the borrowers circumstances and advise them about refinance and home preservation options. Countrywide’s new and enhanced programs include:
– For Countrywide borrowers currently in a subprime loan with a strong payment history, a special refinance unit has been created to contact approximately 52,000 borrowers to offer refinance options. The company has identified and will work to refinance approximately $10 billion of mortgages. For this group, Countrywide will offer borrowers options to refinance into prime or FHA loans. For those with credit issues, Countrywide will offer Fannie Mae or Freddie Mac’s expanded criteria programs. Countrywide has a strong track record of successfully transitioning borrowers from subprime products to prime loans. Year-to-date, more than 31,000 borrowers have refinanced to prime fixed rate loans totaling more than $5 billion.
– Countrywide is working to identify and contact prime and subprime borrowers who are current but unable to qualify for a refinance and are likely to have difficulty affording an upcoming reset. Countrywide will supplement its early notification letter to borrowers by calling no later than three months prior to the reset to determine their financial circumstances and develop affordable solutions. As a result of this initiative, Countrywide will successfully modify $4.0 billion in loans for approximately 20,000 borrowers in an existing adjustable rate mortgage through the end of 2008.
Additionally, for subprime borrowers who are currently delinquent and are experiencing financial difficulties as a result of a recent reset, Countrywide has implemented a simplified loan modification process. Countrywide is in the process of sending letters to these borrowers offering a pre-determined, pre- approved rate reduction. It is anticipated that 10,000 additional borrowers, totaling $2.2 billion, will receive modifications through this initiative by year-end.
Home Preservation Efforts
So far this year, Countrywide’s existing home preservation efforts have helped more than 40,000 borrowers stay in their homes including the completion of 20,000 loan modifications. Countrywide’s comprehensive efforts help borrowers facing financing difficulty. These include:
– 2,700 highly-trained home retention specialists that work with delinquent borrowers by providing payment alternatives in order to help them retain their homes.
– Countrywide borrowers with an impending rate reset are sent a letter 180, 90 and 45 days prior to the rate increase to ensure that borrowers understand their options.
– Outreach to distressed homeowners in their own communities by setting up face-to-face meetings through various means; hosting seminars around the country to help borrowers avoid foreclosure; participating in foreclosure prevention workshops, teaching them about possible foreclosure scams; and offering loan workouts on- site.
– Working with non-profit and community groups across the country to create grassroots efforts to contact and counsel distressed borrowers, particularly in communities that are experiencing unusually high foreclosure rates.
Countrywide encourages consumers who face an increase in their mortgage payment or fear falling behind on their payments for any reason to call the Countrywide home retention team at 800-669-6650.
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