Countrywide will rework $16B in mortgages
— -- Countrywide Financial announced Tuesday that it will restructure or refinance $16 billion in adjustable-rate mortgages that have recently reset to higher rates or will reset by the end of next year, stretching some homeowners to the breaking point.
Its plan comes as the mortgage industry tries to head off mounting political and public pressure and an alarming foreclosure rate.
"Changes in the housing market have occurred, and the trends are weakening," David Sambol, Countrywide's president, said in an interview Monday. "Our leadership position in the marketplace requires us to do more.
"Our desire to help our borrowers very much aligns with our interests: helping people stay in their homes and avoiding foreclosure losses for our company and our investors."
The plan would benefit Countrywide borrowers who:
•Are in default on their loans because of an interest-rate reset in the past few months. Countrywide will send a letter offering to roll back their rate to the previous, lower level. Countrywide expects to modify 10,000 of these loans, totaling $2.2 billion, by the end of this year.
•Are likely to have difficulty affording an upcoming rate increase and are unable to refinance. Countrywide will modify the loan to a rate that will keep borrowers in their homes. The lender says it expects to modify 20,000 loans totaling $4 billion through the end of next year.
But those borrowers who fall behind because they've lost their jobs and lack enough income to keep up with a mortgage won't qualify.
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