Countrywide to Expand Subprime Loan Workouts

Countrywide is “formalizing” its loan workout programs and opening workouts to all subprime loans according to a Market Watch report. Workouts, which have typically been arduous to finalize, have up until now been reserved for those people with adjusting rates that have sent mortgage payments skyrocketing. This program expansion will include workouts for all types of subprime loans.

The initiative is in partnership with consumer group ACORN - a very noisy advocacy group which has campaigned against Countrywide, Wells Fargo and others for predatory lending.

From the release announcing the expansion of subprime loan modifications:

Highlights of the agreement include:

– A systematic approach to helping borrowers with subprime hybrid ARMs
who have strong payment records but may face or are already facing
difficulty with higher payments as the result of interest rate resets.
Solutions in these cases include refinancing into a prime loan or a
loan modification program offering a five-year extension of the rate
prior to the reset, consistent with the previously announced programs.
This portion of the initiative is backed up by a proactive outbound
calling and mailing campaign to contact borrowers and discuss their
options.

– For delinquent subprime fixed rate and ARM borrowers who want to stay
in their homes, ACORN counselors and Countrywide home retention
specialists will utilize a streamlined approach to provide affordable
home retention options that include short-term repayment plans or loan
modifications in line with identified affordability standards. Loan
modification solutions include capitalization of arrearages, an
interest rate freeze or rollback to the pre-reset rate, and, under
certain circumstances, an interest rate reduction.

Bottom line: Countrywide needs to keep people in houses.  Walking away hurts more than loan modifications.  ACORN is a highly-visible advocacy agency that lends credibility to the initiative.  We’ll have to see what the formalized program looks like; but in-all this seems like a good step to improving the loan modification process.  If your loan is not with Countrywide and you have a subprime mortgage loan that you need to modify to afford your payments read this article on do it yourself loan modifications.

This post was found on BlownMortgage
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