Embattled mortgage lender Countrywide Financial announced today that it will change the terms on $16 billion of adjustable-rate mortgages to help people stay in their homes.
Countrywide, the nation's largest lender which is also active on Long Island, will start calling borrowers at risk of default to refinance or modify their loan terms through the end of 2008. It plans to contact 52,000 subprime borrowers who have been paying their bills and another 10,000 borrowers who are delinquent because of a rate reset. The company will also reach out to an additional 20,000 homeowners with prime and subprime loans who are current but will likely have difficulty affording an upcoming reset.
Many people who took out ARMs with super-low teaser interest rates that are now resetting to much higher rates. They are finding they can't afford the new rates, which is driving up delinquencies and foreclosures nationwide.
But not everyone is convinced the company is being altruistic.
“Given Countrywide’s track record, a lot of questions must be answered before they get a pat on the back," said Sen. Charles Schumer (D-NY) "What are the fees they will be charging borrowers to refinance or restructure their loans? Who will qualify for help? And are they putting these borrowers into safe, affordable products or another unsuitable loan?”