Countrywide Financial to broaden its mortgage workout scope
February 14, 2008
On February 2008 the Countrywide Financial announced that it is going to broaden its current programs to give a helping hand to the borrowers handle their mortgage payments. The move is the same for all people regardless of the type of sub prime loan they have or whether they have fallen short on repayments.
Countrywide Financial is the country’s largest lender of mortgages and home loan providers. They are determined to reduce the number of delinquencies that are happening yearly on its books. This they plan to achieve by bringing into action many new loan terms, making long-term repayment plans and other such actions which will make it easier for the borrowers. Company officials last month said that they helped almost 81,000 borrowers who are facing trouble repaying their mortgage payments that were manageable in the year 2007. The policies that are being offered by the company has changed considerably since the last few months after it was targeted by many forced sale prevention advocates on the charge that Countrywide was the company that was the least responsive to the worries that were faced by the borrowers.
Only months ago had the Countrywide started a program to provide help to those people who had taken a sub prime Adjustable Mortgage (ARM). This new measure that the Countrywide Financial along with Association of Community Organizations for Reform Now (ACORN) adds the borrowers of fixed rate loans also into the previous category.
Countrywide’s managing director for loan administration in a call conference said that they are very eager to help all those people who are facing difficulty with mortgage regardless of whether the mortgage is of fixed rate type or adjustable rates.
Countrywide has till date not specified as to how many borrowers the plan is going to help. As per the statistics of the trade group, the Mortgage Bankers Association, the number of fixed rate borrowers comes to almost half of the total number of people who have taken sub prime loans in the country. The number of people who default on a Sub prime fixed rate loan is placed at about 12.2 percent according to the Mortgage bankers Association. But this is very low as compared to the delinquency rate that is recorded by borrowers of sub prime arms, which is almost 18.8 percent. Out of the 9 million loans that are serviced by the Countrywide almost 735,000 falls into the category of sub prime loans.
Previously the foreclosure prevention efforts were primarily centered on the ARM borrowers who were facing the risk because of resetting interest rates. This happens because such loans will have relatively low interest rates for two or three years and after that the percentage points will be reset to a higher figure after that.
The new plan does not leave behind the ARM borrowers. The people who are having hybrid adjustable rate mortgage are given the option of going for a refinance or to have their first interest rate frozen for the next five years.