The Wall Street Journal-20080117-Countrywide Adjusts Terms on Some Loans
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Countrywide Adjusts Terms on Some Loans
Countrywide Financial Corp. said it modified terms on loans and took other steps to allow 81,266 struggling mortgage borrowers to remain in their homes last year.
The Calabasas, Calif., lender is under pressure from politicians and regulators to prevent foreclosures where possible. Lenders also often find that they are better off accepting lower monthly payments from a borrower than going through a foreclosure, which typically results in a large loss. Those potential losses are even greater now that home prices are falling in much of the country.
Countrywide, facing big default-related losses, last week agreed to be acquired by Bank of America Corp. for about $4 billion in stock.
In a further 7,880 cases last year, Countrywide said, it agreed to "short sales," in which the borrower sells the home for less than the loan balance and the lender agrees not to demand the remaining amount due.
Countrywide said it expects to modify loans or otherwise help even more borrowers this year. The company acts as the loan servicer, collecting payments, for about nine million home loans.
Countrywide is participating in the Hope Now program, orchestrated by the U.S. Treasury, that provides for streamlined loan modifications for some subprime borrowers.
In October, Countrywide reached an agreement with Neighborhood Assistance Corp. of America, or NACA, based in Boston, to restructure loans for people at risk of losing their homes. Bruce Marks, chief executive officer of NACA, said the agreement so far is "working out extraordinarily well." To make mortgages affordable for borrowers, he said, Countrywide is sometimes reducing interest rates to as low as 3%.
A Countrywide spokesman agreed the cooperation with NACA is working well. He said reductions in rates to 3% are "very rare."
