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ACORN and Countrywide Reach Loss Mitigation Deal
By Ted Cornwell
Calabasas-Countrywide Financial Corporation and a consumer advocacy group, the Association of Community Organizations for Reform Now, have reached a deal to extend their efforts to help delinquent, subprime borrowers retain their homes.
Countrywide and ACORN are formalizing workout programs for all types of subprime loans, not just hybrid, adjustable-rate mortgages. Countrywide's previous, $16 billion home retention initiative largely focused on borrowers with hybrid adjustable-rate mortgages who are current on their payments but face a potentially onerous payment resets.
The agreement also extends to borrowers that are at all stages of delinquency, reaching borrowers not covered by Countrywide's previous, $16 billion home retention initiative or by the Hope Now alliance program. Michael Gross, managing director of loan administration for Countrywide, said the company is eager to work with subprime borrowers at all stages of delinquency to improve home retention due to rate resets or other financial difficulties.
"At countrywide, Our commitment to homeownership extends far beyond the closing of the loan," he said during a conference call with reporters. "We firmly intend to be the foreclosure prevention and home retention leader."
Countrywide currently has 3,200 employees devoted exclusively to home retention efforts, he noted.
The agreement provides a systematic approach to help borrowers with subprime hybrid ARMs. This aspect of the program will be supported by an outbound call and mail campaign.
For delinquent subprime borrowers with either ARM or fixed-rate loans, Countrywide and ACORN counselors will utilized a streamlined approach to providing home retention options, including short-term repayment plans or modifications.
The modifications may include a capitalization of arrearages, an interest rate freeze, or a rollback to the pre-reset rate. In some cases, Countrywide will consider an interest rate reduction.
Countrywide did not provide an estimate of how many homeowners will receive assistance under the expanded initiative with ACORN. But Countrywide said it completed more than 12,000 workout programs in December, including 10,000 loan modifications. That brought the number of home retention workouts for all of 2007 to more than 81,000.
Currently, Countrywide is working with more than 100,000 additional borrowers in an attempt
Mr. Gross said that there are no restrictions on the new effort, though it is geared toward owner occupants. The plan is designed to put solutions in place quickly for as many borrowers as possible.
Wade Rathke, chief organizer for ACORN, said the group hopes that other servicers will follow Countrywide's lead and extend home retention efforts to borrowers not covered by other initiatives aimed chiefly at hybrid-ARM borrowers who fare facing imminent rate resets.
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