Countrywide...trying to stem the foreclosure tide

SACRAMENTO, Calif. -- The nation's largest mortgage lender announced a new plan Monday intended to reduce home foreclosures by helping those who have fallen behind on their home subprime mortgages.The Countrywide Financial Corp. program, developed in partnership with the Association of Community Organizations for Reform Now, comes in addition to another deal announced last week between mortgage companies and the Bush administration.The first deal focused just on certain kinds of adjustable-rate mortgages and on those who were still up to date on their payments.

That plan only covered a small number of homeowners.In the new plan, Countrywide is looking to reach out to those already behind in paying. The company will let some of those people refinance to a lower interest rate or freeze their current rate."Countrywide and ACORN share the belief that no subprime borrower who has demonstrated the ability and willingness to make payments should face foreclosure," said Maude Hurd, ACORN's president, in a statement.As of Dec. 31, Countrywide already has 94,000 customers facing foreclosure and 629,000 with delinquent loans.

Some consumer groups have accused the mortgage industry of not doing enough to help troubled homeowners.But ACORN said this new effort should be considered a model for other companies.Kelly Brothers, KCRA 3's finanical expert, said the program involving Countrywide and ACORN may benefit the entire slumping housing market."One of the big problems here is the fact there's such a huge inventory of unsold homes, making it doubly difficult to sell your home if you need to," Brothers said. "And of course, if you stop foreclosure proceedings, or at least fend them off for awhile, those are all homes that won't go into that pool of unsold homes.

So, that's good news."But Brothers said the drawback to the new plan is the message being sent to home buyers who opted for more conservative fixed-rate mortgages instead of riskier adjustable-rate mortages. He said those who chose the adjustable-rate option opted to "play the game" in hopes that housing values would continue to rise and that refinancing would be possible down the road."There are a lot of people who took the more prudent course, paid a little bit more in interest up front, but now have a fixed-rate going forward," Brothers said. "So you can understand how those people would think, 'Hey, what about me?'".

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