Countrywide’s Borrower Rescue—Is It Too Late?
By Foreclosure-Fighter staff writer
In late October, Countrywide Financial Corporation unveiled plans to launch a $16.2 billion rescue plan for its struggling subprime borrowers. Because Countrywide is the biggest mortgage lender in the United States, this could mean relief for many Americans—but some critics are saying the move should have been made months ago.
Anyone struggling to make payments on a resetting mortgage or worrying about foreclosure knows that the mortgage industry is in trouble. In fact, the only mystery for many people was probably why more mortgage lenders weren't taking steps to help their borrowers.
Now that the financial hardships individual families have been facing for months have hit Wall Street, the investment companies face the choice of taking action or losing serious revenue and investor confidence.
According to reports from msnbc.com, Countrywide's website listed 13,000 properties for sale this month, almost three times the 5,000 that were posted at the beginning of the year. This number reflects the drastic increase in foreclosures that has accompanied the defaulting of so many home loans.
As house prices continue to fall, Countrywide stands to lose more and more money even if it sells its properties, sources say. Countrywide's plan allegedly includes $4 billion to refinance and $10 billion to modify the terms of loans that have not yet reset, in an effort to prevent any more borrowers from defaulting on payments.
The remaining $2.2 billion is slated for loan modifications for borrowers who have already fallen behind on their payments, according to reports. According to msnbc.com, subprime borrowers will be the focus of all rescue efforts.
An estimated 82,000 struggling homeowners will benefit from Countrywide's rescue efforts, which the company apparently plans to enact by the end of 2008. So why are some still skeptical about the plan?
The past several months have been marked by record levels of late payments and defaults on subprime loans, reports indicate. Millions of American families are expected to have their homes foreclosed upon in the next year. And Countrywide, the nation's largest mortgage lender, has taken almost no action up to this point.
Investors in the company have reportedly taken note of Countrywide's slow-coming aid efforts. Stock values that have fallen more than 60% in 2007 continued to fall after the announcement of the rescue plan, according to sources.
Reports from the Associated Press estimate that, to date, Countrywide has offered refinancing or modification to only 5% of the loans reportedly behind payment schedule. While this accounts for about 20,000 mortgages, more than 500,000 borrowers are still having difficulties making payments.
Hopefully, Countrywide's rescue plan will help prevent foreclosures around the country, and not simply be a gesture too little offered too late.