Countrywide Financial Corporation, responding to widespread criticism that the mortgage industry hasn't done enough to help troubled borrowers, today announced a $16 billion home preservation program targeting troubled borrowers facing an ARM reset by the end of 2008. The program will entail $10 billion in borrower refis and $4 to $6 billion in loan modifications, Countrywide said. From the press statement:
"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.
The nation's largest lender said it expects to modify 20,000 mortgages before the end of 2008 as a result of this program, with another 52,000 borrowers targeted for refinancing. Loan modifications will only be offered to borrowers who cannot qualify for a refinance. Various press outlets are reporting that Countrywide has not yet returned calls seeking additional comment, so it's not really clear how this will be done. My first question here would be: who has really stepped up to the plate here? I'd guess that at least some of the refi activity will undoubtedly be tied to the FHASecure plan announced by President Bush at the end of August, which makes at least of portion of the refi claims somewhat of a borrower retention effort on the part of Countrywide, but there appears to be more to the equation here -- especially in terms of the loan modification commitment. Modifying 20,000 mortgages would seem to hint that at least one participant in the secondary market has potentially green-lighted mass mods that would exceed the usual 5 percent limitation that exists for securitized pools (within some given parameters, of course). I'd be very interested to know if this is the case.